Targeted Genetics Corp. is retaining full rights to its cystic fibrosis program after its collaborative partner, Celltech Group plc, decided to terminate a four-year-old agreement, a deal initially entered with a company later acquired by Celltech.

To date, Targeted Genetics has earned between $25 million to $30 million through the deal. The original agreement, designed to develop a cystic fibrosis program begun in November 1998, was designed to develop a cystic fibrosis program with Medeva plc, the company Celltech bought a year later. But Targeted Genetics said Celltech's therapeutic development programs do not include respiratory products.

"The bottom line is we're really pleased with this news," Targeted Genetics President and CEO H. Stewart Parker told BioWorld Today, adding that the deal was more synergistic when it was with Medeva. "But they were acquired by Celltech, which really has no respiratory franchise and has not been actively participative in the collaboration. So we've been driving it ourselves."

Seattle-based Targeted Genetics said it now has flexibility to explore plans to continue moving the program forward. And Parker said recent clinical findings, including positive preliminary results from a Phase II trial of its tgAAVCF candidate reported at the North American Cystic Fibrosis meeting in New Orleans in October, suggest the program should continue.

Data demonstrate that the aerosolized product, administered via nebulizer to the lung in a randomized, double-blind, placebo-controlled trial that included 37 patients with mild cystic fibrosis, was safe and well tolerated. No clinically significant differences in adverse events or laboratory parameters between placebo and tgAAVCF-treated patients were observed. Patients also were monitored for overall lung function at days 30, 60 and 90 and showed statistically significant improvement at day 30 of treatment (p=0.04).

"It's the first time in a gene therapy trial for cystic fibrosis that anyone's seen any impact on the major primary endpoint - lung function," Parker said.

Levels of interleukin-8, a cytokine associated with inflammation, were lower in tgAAVCF patients after 14 days compared to placebo. Targeted Genetics said the trial also showed gene transfer in all patients tested, as measured by DNA PCR on cells removed by a bronchoscopy procedure. Gene expression was not demonstrated and AAV neutralizing antibody response occurred systemically and locally.

Targeted Genetics said it is continuing with a full analysis of the data, through which it hopes to further validate its early findings.

"We're also looking for any clues as to whether there are particular subsets of patients that respond better than others," Parker said. "But our initial plan right now is to move into a larger, confirmatory study of the data we've generated over a shorter period of time, and then move from that - if it's successful - into pivotal studies."

Such added support for the product should make it more attractive for possible deals down the road, though the company said it already has begun discussions with potential partners to further support the program. The company said it hopes to find a deal that allows it to retain North American rights and partner the program in other geographic areas. Targeted Genetics said it expects to outline future plans for the program in the coming months.

"We really want to move [product development] aggressively ahead," Parker said. "We're talking with a number of funding sources about help with the next trial. Our primary strategy right now is to find creative ways to fund the next trial while seeking partners for the non-North American market."

Medeva's and Targeted Genetics' deal to develop tgAAVCF could have been worth up to $54 million for Targeted Genetics. Under the original agreement, Targeted Genetics received $5 million in technology license fees, clinical and regulatory milestone payments totaling $19 million, a $2 million loan and a $3 million equity investment by Medeva, which also was to contribute up to $15 million in development funding over a three-year period.

Medeva covered costs of clinical and regulatory activities related to the product's development, along with $8.5 million payable upon the signing of the agreement. (See BioWorld Today, Nov. 25, 1998.)

Celltech took over the reins at Medeva in November 1999. The $913 million stock merger, completed in January 1999, created an organization that combined Slough-based Celltech's discovery and development portfolio with London-based Medeva's international marketing infrastructure. (See BioWorld Today, Nov. 12, 1999.)

Beyond its cystic fibrosis program, Targeted Genetics has a clinical pipeline that includes product candidates focused on cancer.

The company has put on hold its clinical cancer product - E1A - until Targeted Genetics locates a partner to help fund further development. It has completed Phase II studies as a single agent in head and neck cancer, and continues studies in combination with radiation to treat the same disease. An ovarian cancer program is on hold as well.

A collaboration with Cambridge, Mass.-based Biogen Inc. has entered clinical studies of a beta-interferon gene to treat glioma.

"And we have products that we're gearing up for clinical trial initiation in 2003," Parker said, noting a rheumatoid arthritis product and an HIV vaccine.

Targeted Genetics' stock (NASDAQ:TGEN) on Wednesday dropped 1 cent to close at 49 cents. Celltech's stock (NYSE:CLL) fell 6 cents to finish at $10.54.