By Karen Young

Celgene Corp. licensed rights to its Thalomid (thalidomide) to Pharmion Corp. in return for royalties in Europe, Australia and other international markets.

The agreement gives Pharmion exclusive licenses to its intellectual property covering thalidomide and S.T.E.P.S. (System for Thalidomide Education and Prescribing Safety), as well as clinical and preclinical data for international regulatory submissions. Separately, Celgene obtained an option to acquire an equity stake in Pharmion.

¿We¿re delighted,¿ said John Jackson, chairman and CEO of Celgene, of Warren, N.J. ¿We think Pharmion is exactly the right kind of company to take Thalomid internationally.¿

The agreement for international rights with Boulder, Colo.-based Pharmion excludes Canada, China, Japan, Taiwan and Korea.

¿This is very important to us as we build a portfolio of hematology and oncology products,¿ said Patrick Mahaffy, president and CEO of Pharmion, noting that the company is focused on licensing and commercializing specialty pharmaceutical products.

Celgene also acquired an exclusive option to purchase Penn T, the arm of Penn Pharmaceutical Services Ltd., of Tredegar, South Wales, that manufactures Thalomid for Celgene.

¿As far as the Penn agreement [goes], it allows us to buy the manufacturing arm of Thalomid at a predetermined valuation,¿ Jackson said. ¿The decision of whether to buy will be made sometime after the introduction of the product.¿

Of course, it also depends on whether the product is successful, he said. If the option is exercised, it would allow Celgene to receive a 36 percent royalty on all Thalomid sales. It also would allow the manufacturing of Thalomid to occur as a wholly owned subsidiary of Celgene. According to a report by Caroline Copithorne at Morgan Stanley in New York, issued Monday, if Celgene does not exercise this option, it would get about 10 percent of sales.

¿Near term, we expect Celgene will recognize nominal up-front and milestone payments from Pharmion, though not material to Celgene, but [the company] should incur no additional development costs,¿ the report stated.

Copithorne also noted that due to ¿the expense and complexity of developing its own infrastructure overseas,¿ Celgene had not expected any sales of Thalomid outside the United States.

Thalomid was approved by the FDA in the United States in July 1998 for the acute treatment of the cutaneous manifestations of moderate to severe erythema nodosium leprosum. Jackson said the drug is not approved in Europe, but it is made available on a patient-by-patient case for those individuals who need it.

Pharmion¿s objective would be to submit a European equivalent of an NDA for Thalomid as treatment for multiple myeloma so that it could be on the market by late 2003.

Pharmion already is developing its sales and marketing force in England, France, Germany, Italy, Spain and Australia.

¿Thalomid is not yet approved in Asian countries, and we might license that out also,¿ Jackson said, noting that the company has no immediate plans to do so.

Sales of Thalomid were $62 million in 2000, and analysts project sales to be between $80 million and $85 million for 2001, Jackson said.

Celgene has plans to submit an NDA for Thalomid for the treatment of multiple myeloma in the United States before the end of the year. Other indications for which Thalomid is being studied include metastatic renal cell carcinoma, myelodysplastic syndrome, colorectal cancer and prostate cancer.

Last week, Novartis Pharmaceuticals Corp., of East Hanover, N.J., and Celgene announced that the FDA had approved a refined version of Ritalin to treat attention-deficit/hyperactivity disorder (see BioWorld Today, Nov. 16, 2001). Copithorne¿s report stated that Novartis should launch this product, Focalin, in late January rather than immediately, ¿cutting royalties in the fourth quarter and reducing 2002 contribution as well.¿

Celgene¿s stock (NASDAQ:CELG) rose $1.99 Monday to close at $37.90.

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