After discovering that their candidate to treat human papillomavirus-related diseases could have more uses than originally expected, partners Stressgen Biotechnologies Corp. and F. Hoffmann-La Roche Ltd. restructured terms of the deal to the financial benefit of Stressgen.
The partners have been working on Stressgen's lead candidate, HspE7, in recurrent respiratory papillomatosis (RRP) and cervical and anal dysplasias via a deal valued at up to $204 million for Stressgen when signed in June. Thus far, Roche has paid Stressgen $21.5 million in various fees. (See BioWorld Today, June 25, 2003.)
Stressgen, of Victoria, British Columbia, and Roche, of Basel, Switzerland, on Tuesday disclosed a restructuring plan aimed at separate, parallel development of multiple indications for HspE7. Under the new deal, Stressgen's potential payments increase by $23 million to $227 million.
"This is a bold stroke, a new paradigm for Roche. Their goal is the same as ours, to move products as quickly as they can through the clinic and to the market," Daniel Korpolinski, Stressgen's president and CEO, told BioWorld Today. "They were willing to step back and think of a better way to do the deal, so I have to compliment them on having the courage in terms of stepping up and saying let's do something different."
HspE7, discovered by Stressgen, is a recombinant fusion product composed of heat-shock protein 65 from Mycobacteria bovis BCG fused to the protein E7, an antigen derived from HPV. HPV infection is one of the more prevalent sexually transmitted diseases, with about 5.5 million new cases in the U.S. each year.
When the companies first set out to develop HspE7, the focus was genital warts (affecting about 1 million women per year in the U.S.) and a smaller RRP population. Women with genital warts often transport the disease to their babies during the birthing process. Korpolinski said there's no cure for RRP. Rather, affected people must have surgeries throughout life.
"It became obvious that there were many, many more potential opportunities, so the new business strategy is two separate products - one for the more discretely seriously ill patients and the other for the broader market for genital warts," Korpolinski said.
Under the new agreement, Stressgen will develop the first generation of HspE7 for all HPV-related diseases except genital warts, while Roche will retain the option to globally develop another HspE7 (second generation) exclusively for genital warts under a separate milestone and royalty structure.
Financially, Korpolinski said Stressgen will book sales on the first generation for the first three years (in U.S. and Canada), while Roche will have an option on the first generation at year four at a significant price.
"What's compelling for our shareholders is that in most partnerships you get one-time payments and milestones that don't recur," he said. "What this deal does is it moves the value chain for the product up because we are going to book sales from the day the drug is approved. Even if Roche ops in, we still get the first three years exclusively, and at year four they can book the sales but they pay a significant royalty."
Korpolinski expects HspE7 to enter the U.S. market in 2007 or early 2008. In clinical trials, Stressgen has reported positive data in more than one indication. In a Phase II trial, HspE7 showed a statistically significant 78.6 percent difference related to the primary endpoint, a reduction in the number of surgeries for pediatric RRP (p=0.015), supporting further studies in a Phase III program.
Final data from the Phase II will be ready in January. Korpolinski expects to meet with the FDA sometime in the first half of 2004 to discuss the Phase III protocol.
The company will release Phase III data from an anal dysplasia study in the first quarter of next year. (Anal or cervical dysplasia can develop into cancer.)
In earlier studies, Korpolinski said HspE7 demonstrated an ability to reduce high-grade dysplasia (requires surgery) to low-grade (watchful waiting) 80 percent of the time.
The restructured deal also includes an option to develop additional candidates using Stressgen's technology for oncology and hepatitis C.
Stressgen's stock (OTC BB:SGBXF) closed unchanged Tuesday at $1.37.