Washington Editor

Triangle Pharmaceuticals Inc.'s stock got a boost Wednesday after the company said it reacquired full rights to three drug candidates from Abbott Laboratories, including one HIV product poised for FDA review next year.

"It's a good day for Triangle Pharmaceuticals," Chris Rallis, president and chief operating officer of Durham, N.C.-based Triangle, said in a conference call with investors, analysts and reporters Wednesday morning.

Indeed it was. In these volatile markets, Triangle's stock (NASDAQ:VIRS) closed Wednesday at $2.88, up 53 cents, or 22.6 percent.

But for good reason. In the first place, late Tuesday, Triangle released promising data from an ongoing pivotal Phase III trial of Coviracil (emtricitabine), a nucleoside reverse transcriptase inhibitor (NRTI) for HIV. Triangle and Abbott began collaborating on Coviracil, along with the other products, in a 1999 deal valued at up to $335 million. (See BioWorld Today, June 4, 1999.)

Triangle expects to file the clinical section of its new drug application for Coviracil in September.

The application will be based on the 571-patient Phase III trial, known as FTC-301. The 48-week, double-blind, placebo-controlled trial compared once-a-day Coviracil to Zerit (stavudine) given twice daily. Each drug was combined within a background regimen of Sustiva (efavirenz) and Videx EC (didanosine).

Rallis told listeners of the conference call that 87 percent of the patients on once-a-day Coviracil showed persistent virologic response through six months, compared to 80 percent of the twice-daily Zerit patients. Coviracil patients also had significant improvements in immunologic function.

"The results clearly exceeded our expectations," Rallis said. "FTC-301 was designed to demonstrate equivalence to Zerit, but based on the interim data, Coviracil demonstrated a compelling improvement."

The Data Safety Monitoring Board, established to oversee the study, observed a significant difference between the Coviracil and Zerit arms at 48 weeks, Rallis said. "The DSMB recommended unblinding the study and offering all patients the superior regimen. Coviracil was identified as the superior arm."

So with all this good news, why would Abbott want out?

Rallis responded to that question by saying, "Our specific priorities within the antiviral areas - to both of us - seem to be diverging.

"As [Abbott] indicates in its press release, it is very much focused on developing a third-generation protease inhibitor and breakthrough drugs in the hepatitis C area," Rallis said. "We, on the other hand, are deeply involved in the NRTI subsegment of the market and are equally committed to hepatitis B. Therefore, despite the good intentions at the outset of this collaboration, we simply seem to be trending in different directions and there was a mutual recognition of this and an intent on both parties' side to do something constructive about it and to end the relationship on an amicable basis, which we did.

"We now have the flexibility to enter into other collaborations for our drugs," he added. "Nothing definitive has been decided, but we are looking at various options."

John Leonard, vice president of Global Pharmaceutical Development at Abbott, released a prepared statement saying, "The agreement with Triangle to end our alliance will enable Abbott to focus exclusively on our core areas of expertise and scientific success in HIV and hepatitis C research, which will include the delivery of a third-generation, breakthrough protease inhibitor and the discovery and development of effective therapies for hepatitis C, a disease with a high co-morbidity with HIV."

The agreement to terminate gives Triangle rights to Coviracil in hepatitis B, currently the subject of a Phase III trial, and all rights to amdoxovir for the treatment of HIV and clevudine for the treatment of hepatitis B. The latter products are in broad Phase II trials.

Upon U.S. approval of Coviracil for HIV, Abbott has agreed to provide Triangle with an unsecured credit line of $30 million, and on European approval, $12.5 million would be made available.

Abbott will receive a 1 percent royalty on the first $200 million cumulative sales of Coviracil for HIV.

Rallis said Abbott will supply the launch inventory of Coviracil and has agreed to make its Chicago manufacturing facility available for up to 36 months should Triangle need support.

"We are confident we will be prepared from an infrastructure standpoint to successfully launch Coviracil next year," Rallis said. "As planned all along, we intend to hire a specialty sales force in the U.S., possibly supplemented by an established contract sales force or by sales resources provided by other collaborative partners. We are confident we will have the necessary sales and marketing muscle in place to launch Coviracil in the U.S. and Europe."

On signing the deal in 1999, Abbott purchased about 6.5 million shares of Triangle stock at $18 per share ($120 million), and in early 2000, Abbott paid a $30 million research payment. Abbott owns 10 percent of Triangle's issued and outstanding stock, or about 7.9 million shares.

Abbott will not be required to pay milestones tied to Coviracil approval and launch. The milestones would have been $120 million for approvals in the U.S. and Europe for both indicaitons of Coviracil, and amdoxovir for HIV.