By Karen Young

CTI Technologies Inc. licensed development and commercialization rights to its anticancer treatment, PG-TXL, in several Asian markets to Chugai Pharmaceutical Co. Ltd. in a deal valued at $73 million.

CTI Technologies Inc., a wholly owned subsidiary of Seattle-based Cell Therapeutics Inc., will get an up-front payment of $3 million and four potential milestone payments totaling $16 million.

¿We would expect to see those coming in over 2002 and 2003,¿ said James Bianco, president and CEO of CTI.

The milestone payments would come after initiating a clinical study of PG-TXL in Japan; beginning at Phase II trial in Japan; acceptance of a new drug application in Japan; and approval of a new drug application, Bianco said.

The company also would receive royalties on product sales in the markets covered in the agreement, which also include China, Malaysia, the Philippines and other countries.

Bianco said the remaining $54 million will be paid by Chugai in development-related expenses. PG-TXL is in numerous clinical trials for a variety of indications, but in the deal with Chugai, the focus will be on ovarian, lung and colorectal cancers.

¿While they do not pay us that money directly, they will pay for the expenses,¿ Bianco said.

Those development results will be very beneficial, for example, when CTI looks to begin clinical trials in Europe.

¿For us to file in Europe, it requires a much more extensive preclinical package than what was necessary in the U.S.,¿ Bianco said. ¿Chugai will be performing those functions, and we will be able to use that data set for our purposes in Europe.¿

The reason Chugai acted quickly on this deal, Bianco said, is that Chugai sees PG-TXL as a superior product. In PG-TXL, CTI links paclitaxel to a biodegradable polyglutamate (PG) polymer. The PG polymer, which is bound to the cancer-fighting drug paclitaxel (the foundation of Taxol and Taxotere), appears to be digested by the tumor, releasing the paclitaxel directly within the tumor.

¿Significantly more of the chemotherapy should accumulate in the tumor tissue,¿ Bianco said. ¿Chemotherapy has to come off the polymer, so because the chemotherapy is bound to the polymer, the amount of free chemotherapy is very low. In fact, in our clinical studies, it has been as low as 100 times lower than a standard dose of Taxol.¿

PG-TXL is in Phase I studies in advanced solid tumors, Phase II studies for colorectal and non-small-cell lung cancer and Phase I/II for ovarian cancer.

Bianco noted that because it is designed to be less toxic, clinicians have not seen some typical chemotherapy side effects such as hair loss, nerve damage or reduction in disease-fighting white blood cells.

The worldwide taxane market is estimated to be between $2.3 billion and $2.5 billion, about 10 percent of which is generated in Japan and South Korea, Bianco said.

¿The real upside is that we still retain 90 percent of the commercial opportunity for this product,¿ Bianco said, noting that at the same time CTI gains a partner with expertise in taxanes.

Another reason that Chugai is interested in PG-TXL is that gastric malignancies are a leading cancer diagnosis in Japan, and Taxol and Taxotere don¿t work on these malignancies, Bianco said. Also, the standard treatments are very toxic. By working with CTI¿s polymer, Chugai has a new way to get at the tumor, while at the same time using a familiar active ingredient, Bianco said.

¿The excitement is you have a potentially safer, but much more effective, version of the world¿s best-selling cancer drug,¿ he said.

CTI¿s stock (NASDAQ:CTIC) gained $1.58 Monday to close at $31.