Washington Editor

In a conference call earlier this year, Michael Astrue, president and CEO of Transkaryotic Therapies Inc., said he would consider signing a partner to help market and develop a potential enzyme replacement therapy for a rare genetic disorder called Hunter syndrome.

That doesn't seem unusual - biotechnology companies look for partners all the time.

But in this scenario, what happened next might be considered odd - or perhaps remarkable.

"When Mike said he was open to discussing a partnership, I gave him a call, and that's basically where we started," Henri Termeer, Genzyme Corp.'s chairman and CEO, said during a joint conference call with Transkaryotic Therapies (TKT) after the market closed Wednesday.

What makes the partnership interesting is that these two Cambridge, Mass.-based companies have been fierce competitors for years, even battling each other in court over patent rights. Both develop enzyme replacement therapies for rare illnesses such as Fabry's disease.

Henceforth, the negative competition is over. Not only did the companies agree to work together on the Hunter syndrome candidate, but they also settled their legal problems in favor of developing drugs for suffering populations.

"I feel good about this," Astrue told BioWorld Today. "Less money going to lawyers and more money going into research - that's the way it ought to be."

TKT's stock (NASDAQ:TKTX) jumped $1.78 Thursday, or 14.9 percent, to close at $13.74. Genzyme's stock (NASDAQ:GENZ) rose 70 cents to close at $48.69.

Competitors Form Collaboration For I2S

TKT and Genzyme formed a collaboration to develop and commercialize iduronate-2-sulfatase (I2S), a product being evaluated in a 90-patient Phase III study. (See BioWorld Today, Sept. 22, 2003.)

Genzyme will develop and commercialize I2S in Japan and other Asia Pacific territories including Australia and China. Meanwhile, TKT retains all rights in North America, Europe and Latin America, and plans to commercialize I2S directly in those areas, company representatives said.

Genzyme paid TKT $3 million in up-front fees ($1.5 million is part of a legal settlement related to other products), and would pay TKT an addition $8 million in relation to certain regulatory and commercial milestones, primarily related to regulatory submission and approval in Japan.

TKT would manufacture the bulk drug substance for commercial sale in Genzyme's territories and would receive payments that would equal approximately one-third of net sales in those territories (33 percent in Japan and 35 percent in other countries). The deal gives Genzyme options to obtain rights to certain other research programs being developed by TKT in the territories where Genzyme holds rights to I2S.

Like other enzyme replacement therapies developed by TKT and Genzyme, I2S will serve a small population worldwide. Nevertheless, product sales for so-called orphan diseases can be lucrative. For example, Genzyme's Cerezyme, a treatment for Type I Gaucher's disease, is directed at a worldwide population of about 3,000 to 4,000 with annual sales of $700 million.

Dennis Harp, biotechnology analyst with Deutsche Bank in New York, told BioWorld Today the Hunter syndrome population is potentially as large.

Of the agreement between the two former rivals, Harp said, "This is a win-win situation for both companies. TKT gains a very strong sales and marketing partner who has development capabilities in the Far East, and Genzyme does well by continuing to expand its product offering in the Far East."

Astrue said Genzyme was the obvious partner because of its expertise in the clinical, regulatory and reimbursement challenges TKT would have faced with the Hunter program in Japan and neighboring countries.

"We are probably the only biotech company at this moment that's been able to take products of this kind through regulatory and clinical development in Japan and actually bring them to market through our own direct sales force," Termeer said.

Specifically, Genzyme sells Cerezyme in Japan and currently is in the filing process for Fabrazyme, its Fabry's disease product. Genzyme is partnered with Biogen Inc., also of Cambridge, to launch Avonex, a multiple sclerosis drug, in that region.

Winning regulatory approval in Japan could take up to three years, Termeer warned. Using the Fabrazyme situation as an example, Termeer said Genzyme had to conduct a "bridging study" in the Japanese population to show safety and efficacy. Typically, the Japanese Ministry of Health does not accept documentation directly from the FDA or European Union, he said.

Astrue said that TKT's 90-patient Phase III should be fully accrued by the end of the year. The trial started about two weeks ago, and, if all goes well, the company believes it can file in the U.S. and Europe sometime in 2005. U.S. trials must be complete before any Japanese study could commence.

Hunter syndrome, often called MPS-II, is characterized by the body's inability to produce the enzyme iduronate-2-sulfatase, which is essential in the continuous process of replacing and breaking down glycosaminoglycans (GAG). Without the enzyme, GAG is stored in cells, often causing progressive damage. In severe cases, life expectancy is 10 to 15 years of age.

Companies Sign Global Legal Settlement

Aside from the agreement on I2S, TKT and Genzyme ended a lengthy legal battle by signing a global settlement.

As part of the agreement, Genzyme will withdraw from the patent suit it brought against TKT in July 2000 involving Replagal (agalsidase alfa), TKT's enzyme replacement therapy for Fabry's disease. (See BioWorld Today, July 26, 2000.)

A day after announcing the global settlement, the U.S. Court of Appeals for the Federal Circuit ruled in favor of TKT saying that Replagal does not infringe upon Genzyme's patent. While Genzyme has withdrawn from the lawsuit, its co-plaintiff, Mount Sinai School of Medicine, is under no obligation to drop the suit in accordance with the TKT-Genzyme deal.

And TKT has agreed not to initiate any patent litigation relating to Aldurazyme (laronidase), Genzyme's enzyme replacement therapy for the treatment of MPS-I (mucopolysaccharidosis-I), which is being commercialized through a joint venture between Genzyme and BioMarin Pharmaceuticals Inc., of Novato, Calif. The companies received FDA approval in April. (See BioWorld Today, May 1, 2003.)