BioWorld International Correspondent

MUNICH, Germany - An Italian-American merger has had repercussions in Germany, as a contract dispute between the merged company and Micromet AG, of Munich, has led the German firm to realign operations and make plans to reduce its staff by more than a quarter.

Since September 2002, Micromet had been collaborating with Novuspharma SpA, of Bresso, Italy, to develop Micromet's cancer antibody MT201. As the companies described the partnership in 2002, "Both parties will share future costs and revenue streams from a joint development and commercialization strategy. In addition, Micromet will receive €4 million in an up-front fee as well as annual and milestone payments."

Following Novuspharma's merger with Cell Therapeutics Inc., of Seattle, a dispute arose about the collaboration on MT201. Neither company would specify the nature of the disagreement, but it is serious enough so that Micromet does not expect to receive any revenue this year from what was originally planned as equal sharing of development costs for the antibody.

"We had a situation that Novuspharma was in a merger with CTI, and it was clear that we would have to wait for the merger to close before we could move on with the MT201 program," Erich Felber, Micromet CEO, told BioWorld International. "We met with CTI shortly after the closing, and from that interaction, we then took back to the company that we don't have an expectation of receiving further milestone and co-development payments from CTI.

"We were not in a position to wait until the dispute was resolved or not, and we had to act," he added.

Micromet will cut back in all parts of the business, while reducing full-time staff from 135 to 90. The company reported that the savings resulting from the realignment are designed to make up for the loss of cash income in 2004 and to ensure progress in Micromet's clinical programs and pipeline-related research projects with its other co-development partners. Cuts will most strongly affect research and early development.

"Our intention is to be financially in a position to pursue MT201 without any payments from CTI," Felber said. "We are initiating a Phase II program, but we are not planning on communicating development progress until the dispute [with CTI] is resolved."

Felber said that the companies had always planned to seek a partner for Phase III testing, saying that "because of the antibody's broad potential, it requires a top-tier partner to fully exploit its potential."

Evelyn Wolf, corporate communications manager at Micromet, told BioWorld International that the company expects to initiate a second Phase II program in 2004 in a different cancer indication.

The cutbacks preserve the company's financial outlook it had before the dispute with CTI. Felber said the company's "cash reach into 2005 is maintained."

Felber said that the cutbacks would be strongest in "early pipeline-generating activities." Micromet's partnership with Enzon, of Bridgewater, N.J., and its two programs with MedImmune, of Gaithersburg, Md., will continue unchanged. "We feel these [partnerships] are very productive, so we can cut back on the early pipeline. We will stay fully committed to MT201 and MT103."

MT201, Micromet's leading prospect, is a fully human antibody that targets the Ep-CAM antigen. The company believes it has the potential to improve the treatment of a wide range of solid tumors, including carcinoma of the prostate, colon, lung, breast, stomach, pancreas, head and neck, or ovary. Micromet is enrolling patients for a Phase II trial in prostate cancer.

Micromet was founded in December 1993, and has raised about €75 million in private investments.

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