West Coast Editor

StressGen Biotechnologies Corp. found a partner for its lead drug to treat the human papilloma virus, nailing down a deal worth up to $204 million in milestone payments with F. Hoffmann-La Roche Ltd., which includes a $5 million equity investment and an undisclosed up-front payment on signing the deal.

The milestones "are equally distributed" in the near term and far term, said Daniel Korpolinski, president and CEO of Victoria, British Columbia-based StressGen. About 20 percent would come in the first two years, one-half during the remaining development period up to launch, and a third within five years after that, he told BioWorld Today.

HPV infection is one of the more prevalent sexually transmitted diseases, with about 5.5 million new cases in the U.S. each year. The disorder can lead to recurrent respiratory papillomatosis (RRP) as well as cervical and anal dysplasias, which can develop into cancer.

The drug, HspE7, is a recombinant fusion product composed of heat shock protein 65 from Mycobacteria bovis BCG fused to the protein E7, an antigen derived from HPV.

"Normally, immunomodulators are very specific, but this fusion protein has a very broad-acting effect," Korpolinski said. "Many of these patients have concomitant diseases."

Now in Phase III trials for anal dysplasia and in Phase II trials for RRP (a wart infection of the upper airways in children, acquired as they pass through the birth canal), HspE7 spurs the immune system to destroy cells infected with HPV. Under the terms, Roche, of Basel, Switzerland, gets worldwide exclusive right to market and sell HspE7, allowing StressGen the right to co-promote it in the U.S. to certain specialized physicians.

"We're responsible for development in RRP and that's all, so there's a cap," Korpolinski said. "We know exactly how much we're on the hook for, and we know we can afford now, before the deal, to take care of that piece."

A resulting benefit is "a significant relief in our costs. Our burn rate for the second half of this year goes down 40 [percent] to 60 percent compared with the first half," he said, noting that the money saved will go into other fusion protein work against diseases such as hepatitis B, herpes and HIV.

The Phase III anal dysplasia trials are expected to yield data at the end of next year.

"In cervical dysplasia, you can go in and cut out the zone where [the organisms live], but in anal dysplasia, you can't do that," Korpolinski said. "Patients lose continence and have to wear a colostomy bag. In terms of number of patients, there's not more demand than for cervical, but the surgery is so onerous" that the need for an alternative treatment is strong. Enrollment in the trial is finished, he added.

But the approval filing will be based on RRP, now in Phase II trials, Korpolinski said. "This is a bad one," he said, noting that the disease amounts to "genital warts acquired in the throat." Surgeons can "go in and shave them with lasers, but the problem is, just like with surface warts, this is only treating the surface and they grow back," he said.

"These [patients] are little guys, and some of these kids have surgery every two weeks for years," he said. "It brings tears to your eyes."

Of the 27 patients in the study, 21 are enrolled, and preliminary data are expected at the end of this year. "This is really a pilot study to see how the drug works," Korpolinski said. "Obviously, if it's very effective, the number of patients we need for the pivotal study will be less."

The HPV organisms that cause RRP are types 6 and 11, and "they're the ones that cause genital warts," a large indication in itself, he added. Types 16 and 18 are implicated in cancer.

Late last year, when it entered an agreement with an underwriter syndicate to raise $15.9 million, StressGen said it was in discussions for a partnership regarding HspE7. (See BioWorld Today, Dec. 5, 2001.)

"We've talked to several pharmaceutical companies, and they're all good, but Roche was particularly compelling," Korpolinski said, adding that StressGen had come up with a "target profile" for a partner and was seeking one with sales and marketing experience with antivirals (Roche is known for its HIV and hepatitis C drugs, among others) as well as significant manufacturing experience.

"We also needed a partner with HPV experience, if at all possible," he said. Thus, a nice fit was the recently disclosed agreement between Roche and the Institut Pasteur, of Lille, France. Roche's diagnostics division licensed what it described as a "broad portfolio" of HPV patents from the institute for an undisclosed sum. Roche also got rights to cross-license agreements in the cases of patents owned by others.

StressGen's stock (TSE:SSB) closed Monday at C$3.98, up C33 cents.