By Brady Huggett
Biomira Inc. and Merck KGaA entered a 15-year, $150 million global collaboration for two of Biomira¿s flagship vaccines, Theratope and BLP25.
The companies will jointly market Theratope, a potential vaccine for breast cancer, and BLP25, for lung cancer, in the United States. Merck will have development and marketing rights in the rest of the world, except Israel and the Palestinian Autonomy Area ¿ for which Biomira already has agreements with MegaPharm Ltd., of Hod-Hasharon, Israel. Merck will market the products through its U.S. affiliate, EMD Pharmaceuticals Inc., of Durham, N.C.
Biomira¿s CEO, Alex McPherson, said Biomira saw a cultural fit between Merck, EMD and itself.
¿We believe we are a very nimble and entrepreneurial company that can make decisions quickly,¿ he said. ¿EMD is entrepreneurial, and Merck is looking at fostering an oncology presence, which is where we want to be.¿
Merck viewed the deal as a chance to climb another rung on the oncology ladder.
¿Our focus going into the future is treatment for cancer and diabetes,¿ said Phyllis Carter, spokesperson for Darmstadt, Germany-based Merck. ¿We are the leader in diabetes, and our goal is to be leader in cancer as well, especially in the biotechnology area.¿
Biomira, of Edmonton, Alberta, is set to gain the $150 million through license fees, milestone payments and equity investments. The companies will share development costs in North America, but Merck will be responsible for clinical studies and marketing elsewhere.
External costs associated with continued development of the two unapproved drugs will be shared equally, including retroactively to Jan. 1, 2001. Biomira will manufacture the vaccines and will be entitled to an equal share on product sales in the United States and Canada, and royalties for all other areas.
Carter said the deal is structured for investor safety.
¿Most of the up-front payment is in the form of an equity stake, rather than a cash payment,¿ she said. ¿The $150 million is mostly back-loaded in our favor, so the risk is low for us in the beginning.¿
McPherson said Merck gets equity, but Biomira isn¿t giving away the farm.
¿I can tell you the equity is less than 5 percent,¿ he said, explaining that the percentage is in treasury notes. ¿They have a right to move to the order of 19 percent if they choose to do so.¿ The additional 14 percent would be in the form of market shares, McPherson said.
Theratope is in a pivotal Phase III trial for the treatment of metastatic breast cancer, with the first data analysis scheduled for the third quarter of 2003. The first interim analysis is expected by the third quarter of this year, and further interim analyses are due in 2002. That leaves a timeline for filing wide open, McPherson said.
¿A biologics license application could be filed sometime in a year after the analysis is done ¿ either the first, the second or the third [analysis],¿ he said. ¿But [even if filed] we are committed to completing the trials, as agreed upon with the FDA.¿
McPherson said and a Phase IIb for BLP25 is enrolling in 10 cities in Canada and four in the United Kingdom. But, McPherson said, because of the depressing mean survival rate of about nine months for the patients in the trial, the trial could progress rapidly.
There appears to be a sizeable market for the products. Both companies said 60,000 new metastatic breast cancer patients are diagnosed per year in the United States alone. And McPherson said the country sees about 90,000 non-small-cell lung cancer patients per year.
One analyst estimated sales of Theratope could move up to $200 million by 2006, and said that, to climb over that mark, the product would need to be approved in the adjuvant treatment market and in combination with chemotherapy ¿ both of which would require additional clinical trials.
The deal has both companies looking forward with optimism.
¿We think this is a seminal event in the history of the company, and has a big impact on our ability to go forward on our pipeline and forward integrate the company for our future products,¿ McPherson said.
Carter said Biomira is ¿a good company and it has good products. Biotechnology is the future of medicine, and this company is going to be a good partner for us.¿
Biomira¿s stock (NASDAQ:BIOM) jumped $1.23 Thursday, or about 15 percent, to close at $8.98.