Washington Editor

Novartis Pharma AG agreed to pay Unigene Laboratories Inc. $18.7 million plus royalties in a licensing deal that provides Novartis with worldwide rights to the recombinant production of calcitonin, the active ingredient used in various formulations for the treatment of osteoporosis.

The news pushed Unigene's stock (OTC BB:UGNE) up 32 cents Thursday, or 47.8 percent, to close at 99 cents.

The deal also gives Novartis, of Basel, Switzerland, the right to produce recombinant calcitonin under Unigene's patented process for manufacturing recombinant peptides. Novartis potentially could supply Unigene, of Fairfield, N.J., with recombinant calcitonin.

"If this deal weren't in place, we might have to spend tens of millions of dollars to build a production facility to produce large quantities of these raw materials like calcitonin," Warren Levy, Unigene's president and CEO, told BioWorld Today. "We won't have to spend the money, [instead] we will have someone else implement our process in their facilities."

Unigene will receive a $5.6 million up-front fee and milestones that could push the total value of the deal to $18.7 million, not including royalties on current and future Novartis products that contain calcitonin made using Unigene's manufacturing process. That process is for making peptides on a large scale using Unigene's amidating enzyme in the fermentation-based system.

Outside the financial benefits associated with the deal, Levy said the transaction confirms "what we've believed all along. That is that our process is the best process out there for making calcitonin."

The deal permits Unigene to retain the right to develop and commercialize its own calcitonin products.

Unigene, founded in 1980 by Levy, is preparing additional information requested by the FDA to win approval of the osteoporosis drug Fortical. "We think everything is well in hand, and hopefully, we will have approval before the end of the year," Levy said.

Fortical, a nasal version of calcitonin, is partnered in a $10 million marketing deal signed in late 2002 with Upsher-Smith Laboratories Inc., of Plymouth, Minn. The FDA issued an approvable letter for the candidate in January. Unigene also is developing injectable and oral versions of calcitonin. (See BioWorld Today, Dec. 3, 2002.)

The firm also signed a $150 million licensing deal with London-based GlaxoSmithKline plc for an oral parathyroid hormone (PTH) analogue also used in the treatment of osteoporosis. (See BioWorld Today, April 16, 2002.)

PTH grows bone while calcitonin products are designed to prevent further bone loss.

Fortical would be Unigene's first U.S. product. In 1999, the firm won approval in Europe to sell Forcaltonin, an injectable calcitonin, in Paget's disease and hypercalcemia of malignancy. The label was expanded in 2003 to include prevention of bone loss associated with osteoporotic fractures.

The firm has filed a regulatory application in China for the injectable and nasal forms of calcitonin and expects the product to be distributed under the terms of a joint venture with Shijiazhuang Pharmaceutical Group, of Beijing.