National Editor

Regeneron Inc.'s fortunes - and its stock - experienced an upswing Monday with the disclosure of a potential $485 million deal focused on its VEGF Trap product candidate with Aventis SA.

The company's stock (NASDAQ:REGN) rose 32.1 percent Monday, or $5.43, to close at $22.31.

Of the $485 million, $125 million is guaranteed, and another $25 million comes when Regeneron meets an early clinical milestone, which the company expects to do early next year.

Aventis would ante up the rest as milestone payments with drug approvals, so it's less certain. Also guaranteed, however, are development costs for cancer and eye indications that Aventis has agreed to absorb (which could total upward of $500 million), plus the manufacturing capability it has promised to build for commercialization supply (about another $200 million).

This puts the collaboration into an even bigger league, although Regeneron must pay back half the development costs if the pact becomes profitable.

Company officials, while not explicit about the development and manufacturing numbers, were enthused about the deal. Leonard Schleifer, Regeneron's CEO, called the collaboration an "extraordinary opportunity" in a conference call with analysts and characterized Strasbourg, France-based Aventis as an "ideal partner."

George Yancopoulos, chief scientific officer of Regeneron, later told BioWorld Today that Regeneron was able to pick and choose among would-be partners - thanks, at least in part, to the good Phase III news offered recently by South San Francisco-based Genentech Inc. with its VEGF cancer drug, Avastin.

Like Avastin, VEGF Trap is a vascular endothelial growth factor antagonist. Although still in Phase I, the VEGF Trap has suggested much stronger binding affinity, Yancopoulos said.

"Our goal from the very beginning was to be on the heels of Genentech and try to come up with something that would be at least competitive" with Avastin (bevacizumab), which has proved strong against colorectal cancer, he noted. (See BioWorld Today, June 3, 2003.)

"That's what a lot of other companies did, once they saw the success of Avastin," he added. "They realized they had missed the boat and started looking around for opportunities. Luckily for us, we had identified [VEGF's promise] long before the rest of the world realized it."

Under the terms, Aventis will pay Regeneron $125 million, of which $45 million is an investment in newly issued Regeneron common stock and $80 million is an up-front payment. Meeting an early clinical milestone would net Regeneron $25 million more. Other milestones are marketing approvals for up to eight indications in Europe and the United States, which would bring another $360 million altogether.

The two companies will share global promotion rights and profits equally, with Aventis funding development costs. If the collaboration, which excludes Japan, becomes profitable, Regeneron would pay back half the development costs to Aventis.

VEGF Trap will be developed in oncology and ophthalmology indications such as age-related macular degeneration, and possibly others. The product candidate is a composite decoy receptor based on two VEGF receptors fused to a segment of immunoglobulin G; it's still in Phase I trials testing safety and tolerability in patients with solid-tumor malignancies and with non-Hodgkin's lymphoma. (See BioWorld Today, Aug. 20, 2002.)

"Avastin clearly has a lead but it's very early in the game," Yancopoulos said. What's more, he said "it's going to take many years to best understand how to use even Avastin," and in how many indications the drug might work.

Meanwhile, Frank Douglas, vice president of drug innovation and approvals for Aventis, said during the conference call that the company will examine the VEGF Trap Phase I data. "Already we see potential for a number of tumors and we'll do [the testing] in parallel," he said. "Certainly, given the Avastin data on colorectal," that indication will be among those tested.

How soon VEGF Trap might enter pivotal trials was uncertain.

"Give us a little time to really fine-tune the development plan that we have and come back to you with that," Douglas said.

Leading Aventis' oncology franchise is Taxotere (docetaxel), a chemotherapeutic for breast cancer and non-small-cell lung cancer, which is being studied in other tumors. The company also markets Campto (irinotecan), a reference treatment for advanced colon cancer, in countries outside of the U.S., and Anzemet (dolasetron mesylate), a 5HT3 inhibitor for the treatment of chemotherapy-induced nausea and vomiting in the U.S.

In age-related macular degeneration, VEGF Trap may have an edge over other drugs in development since there's some evidence it works systemically, so that injections into the eyeball would not be necessary - or, if necessary, might not have to be done as often, Yancopoulos said.

"Once again, it's still early in the game," he said.