Incyte Corp. is jumping into late-stage drug development after licensing rights to Reverset, an HIV retroviral drug candidate, from Pharmasset Ltd.

"We can develop HIV drugs very efficiently once you've reached the stage that this drug is already at," Rich Levy, Incyte's senior vice president of drug development, told BioWorld Today. "We know there is a high likelihood of success, and so we're very comfortable that this will be a real product for us."

Investors seemed to agree, as Incyte's stock (NASDAQ:INCY) gained 24.1 percent Monday, or 97 cents, to close at $4.99.

The product, also called RVT, D-D4FC and DPC-817, is in a Phase IIa program. For Incyte, the decision to license the oral nucleoside analogue signals the first foray into the clinic for its drug development division. Following a redistribution of its organizational structure, Incyte conducts its drug development programs independent of its information products. (See BioWorld Today, May 7, 2003.)

"We now have a real clinical product," Pamela Murphy, Incyte's vice president of investor relations and corporate communications, told BioWorld Today. "The overriding goal at Incyte is to become a leading drug discovery and development company. That is the decision we have favored as we grow the company moving forward. It's an evolution, not an immediate transition."

Palo Alto, Calif.-based Incyte gained exclusive development, manufacturing and marketing rights to Reverset in the U.S., Europe and other unnamed markets in exchange for an undisclosed up-front payment, milestone payments and royalties on net sales, should the product receive approval. The milestones are based on typical goals during the product's remaining development cycle, Murphy said.

Atlanta-based Pharmasset will hold onto marketing and commercialization rights in South America, Mexico, Africa, the Middle East, Korea and China.

"Pharmasset retained certain territories for our existing corporate partnerships and based on our interest in providing anti-HIV therapeutics to developing nations," Alan Roemer, Pharmasset's vice president of business development and general manager, told BioWorld Today. "At this time, we do not know whether we will co-market and co-commercialize the rights to these territories in the future."

The privately held company said preclinical studies indicate that Reverset, which targets HIV-1 and HIV-2 reverse transcriptase, inhibits replication of wild-type and mutant strains of HIV commonly seen after treatment with zidovudine (ZDV) and lamivudine (3TC), including strains that exhibit the M184V mutation. The studies also suggest that Reverset does not produce mitochondrial toxicity, a common side effect associated with certain nucleoside reverse transcriptase inhibitor therapies that can lead to fairly serious and life-threatening bone marrow suppression.

"There really is a continuing need for new products for HIV that treat resistant viruses, and that's the profile of this drug," Levy said. "It treats resistant viruses, and so far seems to be very well tolerated at the doses we need to treat those resistant viruses. It's a once-a-day drug, which is convenient for patients as well."

An ascending, single-dose, pharmacokinetic Phase I study in 56 HIV-1-infected male volunteers showed the drug to be well tolerated, while mild adverse events occurred no more frequently with drug than with placebo. Pharmasset is conducting a 10-day dose-escalating Phase II trial of Reverset in treatment-naive HIV patients.

A second Phase II trial using Reverset, in combination with other antiretroviral agents in drug-experienced individuals, is expected to begin early next year. Incyte will conduct all U.S.- and European-based studies, while Pharmasset will run trials in countries for which it retains product rights.

Murphy said that more than 80 percent of Incyte's drug discovery and development unit, which is based in Delaware, came to the company from Dupont Pharmaceuticals Inc. and New York-based Bristol-Myers Squibb Co. The division numbers about 150 researchers, a shift from Incyte's historic focus as an information provider since CEO Paul Friedman took over operations in November 2001. He and Levy have played a role in prior HIV drug success stories. Murphy said both were instrumental in the development and eventual commercialization of Sustiva (efavirenz, from Bristol-Myers Squibb).

Incyte's shift toward discovery and development became more evident last fall through its $28.3 million purchase of San Diego-based Maxia Pharmaceuticals Inc. At the time, when it was still called Incyte Genomics Inc., it severed ties with 37 percent of its then-700-person work force. (See BioWorld Today, Nov. 13, 2002.)

Since building a discovery and development unit, its research programs are focused on discovering small molecules for cancer and HIV, as well as inflammation and diabetes. More specifically, Incyte's programs include chemokine receptor antagonists for chronic inflammatory diseases, protease inhibitors for cancer, and protein phosphatases for cancer and metabolic diseases. The company expects to move an internal candidate into the clinic by next year.

On the information side of its business, its LifeSeq Foundation database offers human and model organism DNA sequence data and protein information, while its Proteome BioKnowledge Library contains biological information about proteins. DrugMatrix is a chemogenomics reference database of information on the interactions of proteins with many chemical compounds. The company also features ZooSeq for gene sequence and expression information for animal models used in toxicology studies.

Pharmasset, which was spun out of Emory University, continues Phase II studies of Racivir, another nucleoside reverse transcriptase inhibitor. The company also features preclinical programs for hepatitis B and C.