Eliminating a royalty requirement, Shire Pharmaceuticals Group plc acquired from AnorMed Inc. rights to the global patents of Fosrenol - a drug awaiting FDA approval for hyperphosphatemia.
AnorMed would receive up to $31 million if the drug is approved in the U.S., Europe and Japan. In essence, AnorMed is forfeiting a mid-single-digit royalty.
"The reason that we entered into this transaction is we felt that the cash flow from this royalty stream would be better applied to our current programs rather than waiting for the money to come in over the life of the patents," said William Adams, vice president and chief financial officer of Vancouver, British Columbia-based AnorMed. "It's an acceleration of the cash flow to a time when we need the money."
AnorMed plans to apply the funds to its two late-stage programs: AMD-3100, a chemokine receptor inhibitor designed to block CXCR4, is moving into a Phase III trial for stem cell transplantations in cancer patients; and AMD-070, an oral CXCR4 inhibitor against HIV, is moving into a Phase II trial. AnorMed will receive payments from Shire for the patents if and when Fosrenol is approved.
For Shire, the deal means it would collect all sales of the marketed product.
"The main argument for doing this is to ensure that the full revenue and pay comes back to Shire," Jessica Mann, head of corporate communications at Shire, told BioWorld Today.
Under terms of the agreement, Shire would pay AnorMed $18 million upon FDA approval, and another $7 million upon approval in European Union countries. Shire also has a 12-month option to purchase the Japanese patents, if Fosrenol is approved in Japan. Upon approval there and if Shire exercises the option, it would pay AnorMed $6 million. If it does not exercise the option, Shire would pay AnorMed royalties for Japanese sales.
In December, Shire out-licensed the development and sales rights to Fosrenol in Japan to Bayer AG, of Leverkusen, Germany. The move - which meant $12 million up front for Shire - was in line with Shire's strategy of focusing its operations in North America and Europe. The deal potentially is worth more than $70 million in total.
This is the second time Shire has gained rights to the Fosrenol patents. The Basingstoke, UK-based company originally had them in 1996, but they were sold later that year to AnorMed from Johnson Matthey plc, of London. Shire began working with AnorMed in December 1997.
"We had the development, marketing and sales rights" from AnorMed, Mann said. "What we didn't have was the patents."
Hyperphosphatemia occurs when damaged kidneys are unable to filter out excess phosphate that enters the body, resulting in bone pain. The condition might be linked to cardiovascular disease. Elevated phosphate levels also can result in a bone disorder known as renal osteodystrophy.
Fosrenol is a phosphate binder based on lanthanum carbonate. It offers several advantages to current therapies, such as a higher affinity for phosphate and a low systemic absorption. It is dosed as chewable tablets.
Phase III data have shown Fosrenol is effective in reducing high phosphate levels and reducing hypercalcemia. It also showed fewer serious adverse effects and deaths than standard therapies.
AnorMed said analyst and industry reports estimate 2005 worldwide sales for Fosrenol to be about $150 million. The total worldwide market for phosphate binders for chronic renal failure patients is between $400 million and $600 million.
Shire and AnorMed received an approvable letter from the FDA in March 2003 for Fosrenol. Shire has responded to the FDA, which is expected to make a decision soon. (See BioWorld Today, March 4, 2003.)
"We have answered the questions and queries raised by the FDA," Mann said. "It's in their hands now, so it's in the final stages."
The companies submitted for approval in Canada in June 2002. They expected European approval in 2002, but it was delayed when long-term safety concerns were raised. The discussions conducted with the FDA also are expected to satisfy the European Union, enabling approval of Fosrenol by both authorities.
Fosrenol would compete with drugs such as Renagel, which is used for the reduction of serum phosphorus in patients with end-stage renal disease on hemodialysis. Genzyme Corp., of Cambridge, Mass., received approval of Renagel in October 1998. It had sales of $281.7 million in 2003.
AnorMed's stock (TSE:AOM) dipped C15 cents on Tuesday to close at C$6.20.