By Randall Osborne
West Coast Editor
In a whopper deal that follows holiday feasting, Gilead Sciences Inc. ¿ with approval of the HIV drug Viread under its belt ¿ is shoveling onto OSI Pharmaceuticals Inc.¿s plate the entire Gilead oncology business, for up to $200 million in cash and stock.
Gilead, of Foster City, Calif., wants to ¿focus on what we do best, where we can make a difference,¿ said Amy Flood, manager of corporate communications for the company.
¿Part of what we¿re going to do is look at not only advancing the infectious disease candidates we have in preclinical [development], but also look for acquisitions and in-licensing opportunities,¿ she added.
Under the terms, OSI is paying $130 million in cash and $40 million in stock for all rights to Gilead¿s cancer pipeline plus the Boulder, Colo., operations, gained by Gilead in 1999, when it acquired NexStar Pharmaceuticals Inc. Flood said the Boulder facility is ¿really the center for our oncology research.¿
Colin Goddard, chairman and CEO of OSI, noted that the NexStar acquisition for Gilead was ¿largely driven by AmbiSome,¿ a liposomal version of amphotericin B, first approved for fungal infections.
¿We have seen this [Boulder] group evolve significantly since the NexStar acquisition,¿ he said, and it has ¿added some real talent in the intervening two years.¿
OSI will pay Gilead up to $30 million more (either in cash or in cash with stock) when milestones are reached in development of NX211 (liposomal lurtotecan, a topoisomerase I inhibitor), Gilead¿s most advanced drug candidate, which is in Phase II trials for tumors including ovarian and small-cell lung cancer.
Goddard told BioWorld Today that $20 million of that amount will come when Phase III trials begin ¿ probably in the first or second quarter of next year ¿ and the rest will be paid when a new drug application is filed.
The deal is expected to close by the end of the year.
¿It¿s a very clean deal,¿ which OSI ¿managed to accomplish at very fair value, and it comes free and clear of a lot of the encumbrances and liabilities¿ that ensue from buying an entire company, Goddard said.
Said Flood: ¿There¿s been a ton of momentum [with the Viread approval], and we want to capitalize on that.¿ (See BioWorld Today, Oct. 30, 2001.)
Aside from NX211, Gilead has in its cancer pipeline GS7836, a novel nucleoside analogue, which is in Phase I trials and has worked in xenograft models. Close behind is GS7904L, a liposomal thymidylate synthase inhibitor, also for solid tumors, slated to enter Phase I clinical trials shortly.
Included in the deal is a manufacturing agreement under which Gilead will make the liposomal formulations of NX211 and GS7904L at its San Dimas, Calif., facility.
OSI, of Melville, N.Y., has been steadily building its cancer franchise with the likes of Tarceva, a small-molecule, anti-epidermal growth factor receptor drug candidate in Phase III trials for several cancers, and Gilead has been focusing more and more on infectious diseases, so the arrangement works out well for both parties. (See BioWorld Today, Oct. 25, 2001.)
Tarceva is being developed in a three-way alliance among OSI, Genentech Inc., of South San Francisco, and Roche Holdings Inc., of Basel, Switzerland, formed in the first part of this year. (See BioWorld Today, Jan. 9, 2001.)
Goddard said OSI has ¿had a real strategic effort for a year or more of looking at all possibilities to fill in some underdeveloped skill sets in oncology, and to build a clinical pipeline behind Tarceva.¿
Gilead, Flood told BioWorld Today, meanwhile has ¿certainly been moving things forward [in cancer].¿ The deal with OSI ¿came up recently, over the past few months,¿ she said, but ¿about a year ago, we in-licensed two of the products [that OSI is getting in the agreement], and one of them we just initiated Phase I trials on.¿
Gilead has five products on the market, including Viread (tenofovir disoproxil fumarate) for HIV infection; AmBisome (amphotericin B); Tamiflu (oseltamivir phosphate) for influenza; Vistide (cidofovir) for cytomegalovirus retinitis in AIDS patients; and liposomal DaunoXome (daunorubicin citrate) for AIDS-related Kaposi¿s sarcoma.
The company is finishing up late-stage trials with its nucleotide analogue, adefovir dipivoxil, for chronic hepatitis B. Data from Phase III studies will be used in regulatory filings in both the U.S. and Europe, expected during the first half of 2002.
Lazard Freres & Co. LLC, of New York, acted as adviser to OSI, and J.P. Morgan Securities, of San Francisco, advised Gilead. OSI¿s stock (NASDAQ:OSIP) closed Monday at $49.92, down 7 cents. Gilead¿s shares (NASDAQ:GILD) ended the day at $71.29, up $2.09.