National Editor

If it's broke, don't fix it.

That is, if the drug doesn't work as a monotherapy, then give up and try to find someone else who wants to take over development.

Such was the eminently practical approach taken last week by Amgen Inc. with regard to epratuzumab, also known as LymphoCide, for non-Hodgkin's lymphoma partnered with Immunomedics Inc. in North America and Australia.

Early Nov. 10, word was that the companies were in "advanced discussions" that could lead to the end of their deal. Later, Amgen said it "plans to seek another party" that might want to work further with the drug. Most analysts had figured no revenue from epratuzumab into their models, and the impact on the larger company hardly was noticeable.

"It's sort of a non-event as far as I'm concerned," said Janet Gearlds, analyst and portfolio manager with Private Asset Management, Wells Fargo. "I wasn't really putting too much weight on it." The story was different for Immunomedics, whose stock fell 53.4 percent on the news, closing that day at $3.38.

Placing the fate of a single lead product - and to some degree, the fate of your business - in the hands of a large partner is "the biggest trap you can fall into when you're a small biotechnology company," said Ronald Renaud, analyst with Soundview Technology Group.

"If you're a one-hit wonder, you better hope that hit is really a hit," he said.

The possibility that epratuzumab might be out of its league had been in evidence for some time, analysts noted.

Rituxan (rituximab), from Genentech Inc. and IDEC Pharmaceuticals Inc., has dominated the NHL market so powerfully that even Zevalin (ibritumomab tiuxetan), developed by IDEC, couldn't break in.

"Zevalin had terrific clinical data, but has not made any inroads," Renaud said, noting that the drug "can't seem to break the $6 million barrier in terms of quarterly sales," while Rituxan walked away with $371.7 million in sales for the third quarter of this year, a 26 percent increase from the year-before period.

The clinical data for epratuzumab, licensed by Amgen about three years ago in a deal that provided Immunomedics with $18 million up front and the potential for as much as $290 million more, has proved less than terrific.

In January, a monotherapy trial was halted with epratuzumab in patients with low-grade, follicular, B-cell NHL who had failed other therapies, including those using Rituxan.

Epratuzumab works somewhat differently than Rituxan - binding to the CD22 cell-surface protein rather than the CD20 protein, to which Rituxan binds - and there were plans to try it as a combination therapy with Rituxan in patients with indolent NHL.

Not anymore. Amgen said it would not proceed with a registration study and would divest itself of the drug, also known as AMG 412.

Christopher Raymond, analyst with Robert W. Baird & Co. in Chicago, wasn't surprised, and said Amgen probably didn't want to proceed "if they have to be joined at the hip with Rituxan therapeutically."

Gearlds called the move by Amgen simply smart business, and praised the company for being prompt about it. "Especially after the merger [with Immunex Corp.], they've had to become much more savvy," she said.

As for Immunomedics, "I would imagine that, at least by knowing [the Amgen plan], it frees them to pursue whatever they're going to pursue."

Immunomedics said it had tried to come up with an expanded deal that would have given Amgen worldwide rights, but terms could not be reached. Cynthia Sullivan, president and CEO of Immunomedics, told BioWorld Financial Watch that, while talking with other would-be partners outside the U.S., some prospects for worldwide partners came to light. She estimated that the firm would have a replacement partner for Amgen, if one is needed, identified in three to six months.

Meanwhile, Amgen might be looking to take some of its chips off the table. Bringing on a third party would "give Amgen an option to still have their hands in the pie without having a big expense burden attached to it," Renaud said.

But who's going to want to take on epratuzumab, with Rituxan and Zevalin out there? Not to mention Corixa Corp.'s Bexxar. Approved in late June for NHL, Bexxar consists of an antibody specific to the CD20 antigen on B cells conjugated to radioactive iodine-131. Corixa did not disclose revenue from Bexxar in its third-quarter earnings.

"Amgen has made its position quite clear," Renaud said. "If [epratuzumab] had very high potential and is something that could go in and unseat other products in the NHL space, then clearly they would be going ahead with this."

He compared the move to Amgen's decision two years ago to end a deal with Praecis Pharmaceuticals Inc. for Plenaxis, a drug aimed at hormonally responsive prostate cancer. "Amgen in-licensed the product four or five years ago and then decided the prospects were not as great," he said.

The difference with the Immunomedics drug is that Amgen seems at least somewhat interested in having a part in ongoing development, if that's feasible. Epratuzumab, which also is being tested in combination with Rituxan, is "a promising product, but it came late to the game," Renaud said.

He declined to speculate on what's most likely to happen to the drug.

Amgen, Renaud said, has made a financial commitment already. If the company can find another firm to sign a sub-licensing deal, then the NHL bet might be hedged somewhat as epratuzumab tries its luck in the marketplace. Such a deal might be structured "any of a thousand ways," he said, given the ingenuity of lawyers.

Or Amgen could simply return epratuzumab rights to Immunomedics, which would be free to do its own partner shopping. "Clearly there's a risk-sharing component that has come into play," Renaud said, with Amgen eyeing the third-party option, but that doesn't mean it will come to pass.

"Anything could happen," he said.

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