West Coast Editor

Talk about “validation.”

The buzzword often used in discussing deals fits perfectly Genta Inc.’s potential $480 million agreement with Aventis SA to develop the former’s drug Genasense (G3139), the first antisense oncology compound already in multiple Phase III trials to target the Bcl-2 protein and boost the effectiveness of chemotherapy.

The value of the agreement centered on a drug from the antisense space is “primarily related to the quality of our clinical trials, which are randomized, very simple, plain vanilla,” said Raymond Warrell, chairman and CEO of Berkeley Heights, N.J.-based Genta. Such trials are “boring and conservative trials, but in the end worth a premium,” he added.

Under the terms, Genta will get $135 million in initial and near-term payments, including $75 million pursuant to an equity investment on achievement of a clinical milestone; $40 million in development fees; $10 million as a licensing fee; and $10 million in convertible debt.

The undisclosed milestone attached to the $75 million payment is a simple and very near one, Warrell told BioWorld Today, adding that it “was simply a mechanism of deferring the pricing of that equity. It’s a guaranteed payment.”

Another $280 million in cash and $65 million in convertible notes would come with the achievement of more clinical and regulatory milestones.

Frankfurt, Germany-based Aventis, adding Genasense to its strong oncology pipeline, will fund 75 percent of all development costs directed toward the filing of a new drug application for the drug, and will pay all other development costs as well as marketing and sales in the U.S. and elsewhere.

“It’s a very favorable deal, beyond the face-value economics,” Warrell said. “We’ve estimated the foregone costs at $390 million on top of [the $480 million],” bringing the total potential value of the agreement to $870 million.

“This is the second biggest deal in the history of biotech for a single product,” he said. The biggest was New York-based ImClone Systems Inc.’s ill-fated, $2 billion arrangement with Bristol Myers Squibb Co., also of New York, for the cancer drug Erbitux (cetuximab), which has been stalled by the FDA.

“We’re sensitized to that,” Warrell said, adding that both sides are “committed to making this the most profitable” deal in the industry.

Genasense is in Phase III trials for melanoma, multiple myeloma, chronic lymphocytic leukemia, and non-small-cell lung cancer, as well as Phase II studies for leukemia, lymphoma, and prostate and small-cell lung cancers.

Those Phase III trials “should be providing us with data internally over the summer that we think will enable the joint development teams to begin making decisions,” Warrell said. “The major focus of the collaboration is to jump-start randomized trials in big incidence’ diseases colon cancer, lung, breast, prostate and lymphoma. That’s the highest priority of team leaders when they meet later this week.”

Phase III data are expected to be made public in the second half of this year, although Warrell said he couldn’t be sure from which trials the first data will come. Genta’s strategy with Aventis is to file a new drug application from one of the smaller cancer indications, yet to be determined, and then add the larger indications in supplemental NDAs.

“Aventis is very focused on globalized submissions,” he said, and the German firm will be attempting to coordinate the applications in the U.S. and Europe. Genta said late last year, upon raising $28.6 million, that it was negotiating for a partner for Genasense. (See BioWorld Today, Nov. 29, 2001.)

“We were talking with as many as 11 companies in 2001, and began the winnowing-out process at that point,” Warrell said, adding that there was “more than one [company] at the table as of this weekend.”

Aventis whose lead cancer drug taxotere has been tested with Genta’s compound seemed a likely choice to Andrew Gitkin, analyst with UBS Warburg in New York, although he wrote in a research note that he did not expect the deal to be so large. Results from studies of Genasense with taxotere were presented recently at the American Association for Cancer Research in San Francisco.

Genta’s stock (NASDAQ:GNTA) closed Monday at $12.78, up $1.06, or 9 percent. Aventis’ shares (NYSE:AVE) ended the day at $68.69, down 86 cents.