National Editor

Keryx Biopharmaceuticals Inc. plans to beef up its oncology pipeline by taking over Access Oncology Inc., assuming about $7.5 million of the latter's liabilities and gaining three Phase II compounds.

"It's a turnkey move into oncology," said Michael Weiss, chairman and CEO of New York-based Keryx. The company's stock (NASDAQ:KERX) jumped 95 cents Thursday, or 20.6 percent, to close at $5.57. Keryx's lead product targets diabetic nephropathy.

"The up-front consideration is assumption of the debt," he added, and if the drugs advance according to plan (and shareholders approve), Keryx will issue up to 4 million shares of common stock for all shares of Access - a deal valued at about $18.5 million, based on Keryx's $4.62 closing price on Wednesday.

Of the 4 million shares, the first 500,000 would vest upon the start of the first Keryx-sponsored Phase III trial, Weiss told BioWorld Today. Another 750,000 shares would vest upon acceptance by the FDA of the first new drug application, and 1.75 million more would come with the first new drug application approval.

Two sales milestones are included. If and when the first drug hits $100 million in annual sales, 500,000 more shares would vest. If sales reach $250 million, the final 500,000 shares would vest.

"I think the Access folks are very confident in what they have, and we wanted to structure a success-based transaction," Weiss said. "It's not a small number of shares, but it's also not a large number of shares in the grand scheme of things."

He said Access, also of New York, "has been known to us for some time, but the deal came together rather rapidly, in the last month or so."

Compounds acquired in the deal include those to be designated KRX-0401, KRX-0402 and KRX-0403. The first is a novel, first-in-class, oral AKT-inhibitor that has shown single-agent antitumor activity in Phase I studies and is being tested in nine Phase II single-agent clinical trials in six tumor types, including breast, prostate, melanoma, pancreatic, sarcoma and head and neck cancer. The studies are being conducted by the National Cancer Institute in Bethesda, Md., under a collaborative research and development agreement.

Activating the AKT pathway apparently plays a role in cell survival and proliferation, and orally administered KRX-0401 is believed to be the only AKT inhibitor in clinical development mainly for cancer.

The drug also has been shown to significantly inhibit signal-transduction pathways including MAPK and JNK, with preclinical data suggesting synergy with other cancer therapies, and Keryx said it plans to begin studies testing KRX-0401 this year in combination with chemotherapy in multiple cancer types.

The second drug, KRX-0402, is an inhibitor of DNA repair, which also is being studied by the NCI under a collaborative deal in multiple Phase II trials.

"In those [NCI] arrangements, typically you'll find the company will agree to provide drug for the studies, and there may be some other payments, but they're reasonable payments," Weiss said. "The vast majority of the cost is borne by the NCI."

The third drug, KRX-0403, is a spindle poison, or blocker of cell division, in the same general class as Taxol (paclitaxel) and others. It's expected to enter Phase II studies this year.

Apart from the Access deal, Keryx has KRX-101 (sulodexide), a first-in-class oral heparinoid compound, for the treatment of diabetic nephropathy, for which Keryx recently commenced its U.S.-based Phase II/III program. The drug is an oral twice-a-day glycosaminoglycan that works by reducing the excretion of proteins by the kidney. Analysts estimate the market for diabetic nephropathy could reach $1 billion by 2010.

Weiss said Keryx regards KRX-101 as the lead product.

"We're hopeful we can start delivering Phase II data at the end of 2004 or the beginning of 2005," he said, with a drug potentially on the market in 2007.