Further transforming its focus, ViroPharma Inc. out-licensed an antiviral compound through an agreement that could net the company up to $75 million.

Schering-Plough Corp. exercised an option to license U.S. and Canadian rights to pleconaril, a common cold product that once had a regulatory setback at the FDA. That stumbling block led to the dissolution of ViroPharma's prior deal, an agreement with Aventis Pharmaceuticals Inc., related to an oral formulation of the drug.

But ViroPharma courted Schering-Plough with an intranasal version of pleconaril, which treats both rhinovirus, the cause of the cold, and its symptoms. The latest agreement is expected to close in the next 45 days, after which Schering-Plough would assume all future development and commercialization responsibilities.

Besides taking product development off ViroPharma's hands, the transaction signals a shift in direction at the Exton, Pa.-based company. ViroPharma's stock on Monday (NASDAQ:VPHM) gained 21 cents, or 10.8 percent, to close at $2.15.

"Pleconaril was ViroPharma, and ViroPharma was pleconaril for years," ViroPharma CEO Michel de Rosen told BioWorld Today. "But we decided to change our strategy to focus the energy of the company on products that were specialty/niche products, and no longer on those that are primary-care products. Pleconaril is by definition a primary-care product."

When the deal finalizes, ViroPharma will receive an initial license fee of $10 million from Schering-Plough, which also agreed to purchase ViroPharma's existing inventory of bulk drug substance for an additional pre-determined fee. ViroPharma also could receive $65 million in milestone payments upon certain regulatory and commercial events, as well as royalties on eventual sales.

Because of ViroPharma's changing focus, de Rosen said the company wanted to fully out-license the rights to a large pharmaceutical firm with a primary-care presence and respiratory experience. Beyond the cold, Schering-Plough's license also allows it to further develop pleconaril in other areas such as picornavirus, for which ViroPharma provided the compound to more than 700 patients as part of a compassionate-use program.

Schering-Plough's decision to opt into the license stems from a November agreement it struck with ViroPharma, which at that time received an up-front option fee of $3 million to conduct a series of clinical studies to test the intranasal formulation. After evaluating the results, Kenilworth, N.J.-based Schering-Plough decided to license the product.

Intranasal pleconaril, de Rosen said, represents an optimized delivery approach compared to its earlier oral formulation called Picovir, for which the company filed a new drug application in 2001. That application drew a non-approvable letter, disclosed by ViroPharma and Aventis in the spring of 2002. Though studies pointed to the drug's efficacy, de Rosen said, safety issues arose because pleconaril was shown to induce an enzyme called CYP3A and cause drug interaction problems. Three months later, their deal came undone and ViroPharma reported plans to slash nearly two-thirds of its work force. (See BioWorld Today, May 13, 2002, and Aug. 2, 2002.)

"When that happened, we went back to the drawing board," de Rosen said. "We came to the conclusion that the best way to go was to transform this oral product into an intranasal product. The thinking there was that the site of infection for the common cold is the nose. So by going directly to the nose as opposed to going to the nose through the liver, we could put much more product into the human body."

Other problems had surfaced two years earlier when Phase III data failed to point to a statistically significant benefit for Picovir in viral respiratory infection in adults and viral meningitis in adults and children. (See BioWorld Today, April 12, 2000.)

Through the clinical testing that followed the option agreement with Schering-Plough, de Rosen said ViroPharma determined that the intranasal formulation would not induce drug interaction issues through the CYP3A pathway, and also proved the product's efficacy in the nose.

"We believe this is not only good news for cold sufferers," de Rosen said, "but it also is good news for ViroPharma shareholders, and we believe it is also good news for Schering-Plough."

ViroPharma originally gained its license to U.S. and Canadian pleconaril rights in 1995 from Sanofi-Synthelabo SA. The Paris-based pharmaceutical giant, which recently completed its merger with Aventis SA, of Strasbourg, France, retains rights in all other territories.

With pleconaril's development off ViroPharma's books, the company is steering toward more targeted areas. To that end, it gained a license a year ago to an antiviral compound for cytomegalovirus from GlaxoSmithKline plc, of London. Called maribavir, it is in Phase II work, de Rosen said. (See BioWorld Today, Aug. 12, 2003.)

The company has a pair of hepatitis C products partnered with Wyeth, of Madison, N.J. The lead compound, labeled HCV-086, is in clinical proof-of-concept studies. An investigational new drug application for an unnamed second-generation product is scheduled to be filed by the end of the year. (See BioWorld Today, June 20, 2002.)

Shedding another program outside its new direction, ViroPharma out-licensed its biodefense research to SIGA Technologies Inc., of New York.

"We want to build a company that will be focused on specialty products serving limited numbers of doctors," de Rosen said, adding that ViroPharma also plans to in-license a marketed product by the end of this year. "In this context, we decided that pleconaril, which was the company's No. 1 diamond, remains a diamond, but we wanted to put it in the hands of another company."

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