By Brady Huggett
BioCryst Pharmaceuticals Inc. received notice from Ortho-McNeil Pharmaceuticals Inc. and R.W. Johnson Pharmaceutical Research Institute that the Johnson & Johnson companies were terminating their worldwide license agreement for the flu treatment product, RWJ-270201.
The termination by Ortho-McNeil gives back BioCryst, of Birmingham, Ala., rights to the influenza neuraminidase inhibitors. Although the deal is broken, Ortho-McNeil is required to maintain any work in progress for the next four months. RWJ-270201 is in four Phase III trials worldwide.
In a public conference call Monday, the news of Friday¿s rights return and deal neutralization was described by BioCryst¿s CEO Charles Bugg as ¿very disappointing.¿ But it isn¿t the end of the road for the product, said Randall Pittman, chief financial officer at BioCryst.
¿We¿ll take over the responsibility for the Phase III trials, and we¿ll have to sit down with the folks at [J&J] and evaluate the status of [the trials],¿ Pittman told BioWorld Today. ¿We are certainly going to step in and work on the Phase II trials. Our anticipation would be to find another marketing partner prior to filing [a new drug application].¿
The word from the J&J camp is the termination has nothing to do with the drug itself, but instead is a re-evaluation of internal programs.
¿Based on a recent investigation we concluded that from a business perspective we would not make any further investment in this program,¿ Bill Foster, director of public affairs at Ortho-McNeil, told BioWorld Today.
The termination marks the third time recently that J&J companies have given BioCryst bad news concerning RWJ-270201 and its trials. In October, the Institute told BioCryst it would not start two clinical studies of the drug in the elderly, blaming the delay on ¿logistical considerations.¿ BioCryst¿s stock (NASDAQ:BCRX) suffered a 53 percent stock drop on the news, closing that day down $8 to $7.187.
Slightly more than two months later, BioCryst heard from J&J that a pivotal Phase III in the U.S. would be delayed. BioCryst¿s stock closed the day at $6.50, weakened by 34 percent. As with the news of the deal termination, J&J said both times the snags were not related to RWJ-270201¿s efficacy or safety. (See BioWorld Today, Oct. 13, 2000 and Dec. 27, 2000.)
BioCryst¿s shares lost $1.84 Monday, or about 27 percent, closing at $4.92 on trading nearly ten times its average volume. A valuation drop like that is to be expected on news like this, Pittman said.
¿Our stock is relatively thinly traded and we are not surprised there is a short-term hit on it,¿ he said. ¿Long term we feel there is still plenty of value in the company.¿
RWJ-270201 is designed to be taken orally once a day. It works by inhibiting the enzyme neuraminidase, located on the surface of the flu virus. Neuraminidase assists in the release and spread of the flu virus by breaking the chemical strands that hold new viruses to the cell surface, allowing the replicated virus to spread. Inhibiting neuraminidase is intended to keep new viruses attached to the cell surface, thereby preventing their spread.
Pittman said BioCryst¿s business strategy has always been to have a large pharmaceutical company work with them at the commercialization stage, and that continues to be a focus.
¿We don¿t have a sales force,¿ Pittman said. ¿By the time we get to the stage where [a product] is going to be marketed, we have to have a partner.¿
Bugg said in the conference that even though BioCryst will take on the trials itself, getting the product repartnered in the next year or two would be beneficial, and the company would soon be talking to a number of candidates.
One hindrance to the trials, especially for the Phase III trials in Europe, has been the light flu season Europe underwent this winter.
¿It was a slow year for the flu, apparently, worldwide,¿ Pittman said. ¿The incidence of flu in Europe was not as high, so [J&J] did not enroll all the patients they needed in Europe. I think it is 75 to 80 percent complete. We¿ll have to go back next flu season and finish it.¿
For the moment, BioCryst will take back the late-stage product it gave to J&J as a preclinical compound in 1998 and move ahead alone, managing the Phase III trials and waiting for the flu to come around.
¿We¿ve got everything back,¿ Pittman said. ¿All the rights, all the improvements, the results for over 30 trials [J&J] performed. We feel like we have a very valuable property here.¿