Several months after the company cut three late-stage programs, Chiron Corp. has set about the business of building its pipeline, nailing down a small-molecule partnership with GlaxoSmithKline plc to fuel research in the melanocortin 4 receptor pathway.
Emeryville, Calif.-based Chiron has taken the work only as far as the preclinical stage, but investigations have yielded promising drug candidates in obesity, the company said.
Eric Schmidt, analyst with S.G. Cowen Securities Inc. in New York, was less than impressed with the agreement.
"For a company like Chiron, this deal is not particularly meaningful," he told BioWorld Today.
Under the terms, Chiron gets an up-front payment, research funding, milestone payments and royalties, but further details were not disclosed. At some point, GlaxoSmithKline has agreed to take over the program for clinical and commercial development.
"This probably trims [Chiron's] research and development budget a little bit and it saves them some money, and there could be some more money coming down the road," Schmidt allowed, but he said the deal almost doesn't qualify as a material event, given the early stage of Chiron's melanocortin 4 receptor (MC-4R) research.
John Gallagher, media relations manager for Chiron, said MC-4R falls outside of the company's focus on cancer and infectious disease, "and we've said all along that, under the circumstances, we'd look for partners [for such programs.]"
"I wouldn't want to over-hype it," he added. "It's a promising early stage candidate, and that's good enough."
When hopes fizzled a few years ago for research into leptin and its role in obesity, much excitement was transferred to MC-4R, silencing again the doubters who said the condition might not be controlled by a single gene.
In October 1998, an article and letter in Nature Genetics by groups from France and the U.K. explained how MC-4R works - and its relation to the once-ballyhooed leptin. MC-4R, a seven-transmembrane G-protein, is found on cells in the hypothalamus and is activated by a molecule called alpha-MSH, which is induced when leptin binds to the brain.
Others had gone after MC-4R before that paper appeared, and the work has been the subject of at least one other major pharmaceutical deal: In the spring of 1998, San Diego-based Trega Biosciences Inc. entered a deal with Novartis AG, of Basel, Switzerland, centered on MC-4R and obesity and worth as much as $75 million. (See BioWorld Today, May 27, 1998.)
But in December 2000, LION bioscience AG, of Heidelberg, Germany, bought Trega for about $12.3 million, and last year LION discontinued its life science work, closing biology labs in Heidelberg and chemistry labs in San Diego, and eliminating 86 full-time positions. (See BioWorld Today, Dec. 28, 2000, and Sept. 9, 2002.)
"I know there are some other companies working on it," Gallagher told BioWorld Today.
In its most recent quarterly report, Chiron reported strong growth in sales of its array of marketed products, with pro forma net income from continuing operations of $89 million, or 46 cents per share, which beat Wall Street consensus estimates of 32 cents per share. (See BioWorld Today, Oct. 25, 2002.)
"They've been doing very well in posting upside to expectations," Schmidt said, "but they definitely could use more of an R&D pipeline," which any gains from the deal with London-based GlaxoSmithKline might help the company further finance.
Also in October, the company dropped three programs: a Phase III trial of recombinant human interleukin-2 in HIV patients; Phase II development of PA-1806, a product for Gram-negative infections in cystic fibrosis patients; and the hepatitis B product HBV-MF59, in Phase II trials.
Schmidt said MC-4R is a program Chiron has "been working on for some time, but has never given the program a whole lot of visibility" - and the company still is not giving much of that.
"It's hard to say much about [MC-4R]," Gallagher said, declining to comment on whether the pathway might also be investigated for diabetes, an obesity-related disease, or at what juncture GlaxoSmithKline might take over the program. "It's preclinical and still has a ways to go," he said.
Chiron's stock (NASDAQ:CHIR) fell $1.27 Wednesday, to close at $38.84.