Isis Pharmaceuticals Inc. and Elan Corp. plc terminated one of their joint ventures but agreed to extend another - related developments that both bode well for Isis.
Through the agreement to dissolve HepaSense Ltd., Carlsbad, Calif.-based Isis regains all rights to ISIS 14803, in development to treat hepatitis C virus. At the same time, both parties amended the terms of another agreement and extended their collaboration in the Orasense Ltd. joint venture through the end of this year.
The conclusion of Elan's participation in the collaboration results from the Dublin, Ireland-based firm's continuing restructuring efforts as it returns to its core businesses of neurology, pain management and autoimmune diseases. As part of its reorganization, Elan said it would evaluate all of the 55 biotech joint ventures in which it had entered. (See BioWorld Today, Aug. 12, 2002.)
"Elan has said publicly that in the context of ending a number of these relationships, its goal is to leave its partners with what they need to move the technology forward and that's what it's done with us," said B. Lynne Parshall, Isis' executive vice president and chief financial officer. "We think it was a very favorable resolution, one that Elan was forced into by its circumstances, but we're very happy with."
Earlier this summer, Isis took a proactive measure to guard against financing associated with Elan and their two joint ventures. Isis in July restructured the joint venture by prepaying $19.7 million in 12 percent convertible debt held by Elan, of which $14.7 million was in cash. It was determined that Isis would fund its portion of the ongoing joint venture and development, rather than accruing additional convertible debt. The company said the transaction saved Isis $12.3 million in interest and allowed it to avoid 2.2 million shares of potential dilution over the remaining life of the obligation.
As part of the termination, all rights to the antisense inhibitor of the hepatitis C virus have been returned to Isis, with a potential royalty due to HepaSense. The agreement originally was entered nearly three years ago, giving Isis an 80.1 percent ownership stake and the remainder to Elan. (See BioWorld Today, Jan. 10, 2000.)
In its third-quarter earnings report released Wednesday, the company posted a net loss applicable to common stock of $17.8 million, or 33 cents per share. As of Sept. 30, it had cash and short-term investments of $292 million. Isis said it would not receive all the HepaSense revenue it originally projected for 2002 - $5 million, Parshall said. Though she said the lost revenue would have minimal impact on Isis' immediate financial picture, the company eventually expects ISIS 14803 to more positively impact its earnings.
Isis said it plans to continue the clinical development of the compound, especially in light of data culled from two Phase II studies reported earlier this week at the American Association for the Study of Liver Diseases meeting in Boston. Results demonstrated that ISIS 14803 is active in difficult-to-treat, drug-resistant, genotype 1 hepatitis C patients, Isis said. In the first trial, in which patients were dosed for one month, ISIS 14803 resulted in significant viral titer reductions. In a second ongoing trial in which patients were dosed for three months, even more profound viral titer reductions were observed in six of 17 patients. The safety and efficacy of ISIS 14803 are being further evaluated in the latter 40-patient study.
"We're still working out exactly what the next stage of development is going to look like," Parshall said. "One of the things that we're looking at is combination therapy, we're also looking at single therapy. We're looking at different dose regimens. So it's still a little bit premature to say exactly what the clinical plan is, but we do plan on moving the drug forward aggressively."
The Orasense joint venture is developing oral formulations of antisense drugs, with ISIS 104838 its lead candidate. The antisense inhibitor of TNF-alpha is designed to treat rheumatoid arthritis. Originally slated to expire in May, the collaboration will continue through the remainder of the year, with Isis and Elan contributing funding according to their ownership, also 80.1 percent and 19.9 percent, respectively. In 2003, Elan will have the option to extend or conclude its participation in the Orasense collaboration.
"Orasense is being extended because we're in a critical stage of the research program," Parshall said. "We think it's a promising technology so we've extended it through the end of the year to complete some ongoing experiments."
In Orasense, multiple oral solid formulations of a second-generation antisense drug are being evaluated in Phase I trials. Data will be presented next week at the American Association of Pharmaceutical Scientists meeting in Toronto.
Isis has commercialized its first product, Vitravene (fomivirsen), to treat CMV-induced retinitis in AIDS patients. Products in late-stage development include Affinitac, an inhibitor of PKC-alpha that is in Phase III trials for non-small-cell lung cancer, and alicaforsen (ISIS 2302), an ICAM-1 inhibitor in Phase III trials for Crohn's disease.
Isis is developing Affinitac in collaboration with Indianapolis-based Eli Lilly and Co., with the latter funding the former's development work in exchange for worldwide marketing rights. The partners plan to file next year a new drug application on the basis of a single study if Isis' 600-patient trial data meet expectations. If not, they will wait until Lilly's trial concludes and include that data as well.
Isis is developing alicaforsen on its own through two ongoing Phase III studies, one primarily in North America and the other mostly in Europe.
In addition, Isis has 13 antisense products in its pipeline with six in Phase II trials.
Isis saw its stock (NASDAQ:ISIS) rise 4 cents to close Wednesday at $10.47. Elan's stock (NYSE:ELN) climbed 15 cents to close at $2.20.