SAN FRANCISCO - Strong science, a drug targeting the major unmet medical need of age-related macular degeneration and luck came together for Eyetech Pharmaceuticals Inc. to nail down its potential $770 million deal with Pfizer Inc., said David Guyer, Eyetech's CEO.
The collaboration won a voting contest for the "breakthrough alliance" at Allicense 2004, sponsored by San Francisco-based Recombinant Capital, and Guyer provided a glimpse inside the pact for attendees at the meeting. Four-year-old Eyetech, of New York, was born out of frustration, said Guyer, who is a surgeon.
"It was a very difficult situation, seeing these elderly people that were otherwise healthy going blind," he said.
Among biotechnology firms, "none of them realized, at the time, how large the back-of-the-eye disease market was," Guyer said. "I was met by a lot of resistance from these companies that either said, We don't think the market is this big,' or We want to be an oncology company or a cardiovascular company,' or whatever."
Part of the problem was ignorance about AMD, he added.
"I remember [from] one company specifically, the market research department came back and said, What's the big deal if you go blind in one eye? You still have the other,'" Guyer said. "Not only was it silly - obviously it's important to have both eyes - but in this disease, if you live long enough, it does develop in both eyes."
Eyetech's injected drug, Macugen, targets abnormal blood-vessel growth and blood-vessel leakage associated with elevated levels of vascular endothelial growth factor in the eye. The potential $770 million deal with Pfizer was signed in December 2002, and Eyetech went public with a $136.5 million offering in February 2004, the year's first IPO. (See BioWorld Today, Dec. 19, 2002, and Feb. 2, 2004.)
Under the terms, Eyetech got profit-sharing and co-promotion rights in the U.S. (in which Eyetech records all sales) plus royalties outside the country, and Pfizer pays most of the ongoing development costs.
"When we started this company four years ago, we were already in trials and we had a very aggressive clinical trial design; it was a Phase II/III pivotal trial," Guyer said. "While we felt we could build a U.S. sales force, because there are only 1,400 retinal specialists in the U.S. that treat AMD, we were concerned that we were too young of a company to have the ex-U.S. commercialization [capability]."
At the same time, Eyetech "did not want to be just a research arm of a big pharma company," he said, and wanted to "get our sales force out there early to prime the [U.S.] market for Macugen, so we looked very carefully [to see] what product we could put in our bag immediately, three to six months before [selling Macugen], in order to get to know the retinal doctors."
Timing was critical.
"We felt the most value would be [achieved] if we did a deal as late as possible," Guyer said. "Clearly, we would like to have had Phase III results, or at least have recruitment in our Phase III program done, but we had to weigh that against the fact that we had a fast-track program. If we waited too late, such as when we [got] Phase III data, we were concerned that would delay launch outside the U.S."
Therefore, Eyetech took a "compromised position," he said, deciding to finish recruitment of Phase III and then seek a partner. The process was done carefully, with an "auction-type" selection made between several bidders.
"All the companies knew we were doing this - they had to accept it," Guyer said, adding that "once you start limiting your options, then the time schedule for completing the deal is in big pharma's control, as are many times the financials." Eyetech, he said, kept "multiple options open really until the last second."
Another important aspect of leverage was that Eyetech had managed to raise plenty of cash practically from its outset in April 2000, when the company was founded and when it in-licensed Macugen (pegaptanib sodium) as NX 1838 from Gilead Sciences Inc., of Foster City, Calif., in a deal valued at at least $32 million. (See BioWorld Today, April 7, 2000.)
Bidders for the partnership "knew we had the cash to finish the Phase III on our own," Guyer said.
The choice came down to Pfizer. Just a "five-minute walk" from Eyetech's offices in New York, the pharmaceutical giant has Xalatan (latanoprose ophthalmic solution), which is the most prescribed treatment used to lower elevated eye pressure in patients with ocular hypertension or open-angle glaucoma. Pfizer got the blockbuster Xalatan in its $60 billion merger in July 2002 with Pharmacia Corp., of Peapack, N.J.
Talks with Pfizer had begun before Pfizer bought Pharmacia - with which Eyetech also was negotiating with regard to Macugen, Guyer said. As part of the deal with Pfizer, Eyetech participates in selling Xalatan, thus getting a foot in the door of retinal physicians who might have interest in Macugen. Another major deciding factor in Pfizer's favor was that the company understood the need for an effective, safe AMD drug.
After investigating thoroughly, "they got it," Guyer said.
"The first day Pfizer brought their technical due diligence team in - they must have brought 40 or 50 people - and we really did not have enough chairs in our office," he said. "We had to rent some."
Eyetech and Pfizer expect to file a new drug application with the FDA in the third quarter. Due mid-year are Phase II data with Macugen in diabetic macular edema.
The Allicense meeting, held annually, ended Wednesday.