By Brady Huggett

Gilead Sciences Inc. received exclusive worldwide rights to NX 211, its investigational cancer compound, from GlaxoSmithKline the preferred way - by U.S. Federal Trade Commission instruction.

"This is a very positive event for Gilead," said John Milligan, vice president of corporate development at Gilead. "This divestiture is very fortunate and we think it will translate to greater benefit for our shareholders and for patients."

In order to comply with the FTC and complete the merger between SmithKline Beecham, of London, and Glaxo Wellcome plc, of London, GlaxoSmithKline waived its right to participate in any development and commercialization of NX 211. Gilead's royalty obligations on product sales were eliminated in exchange for undisclosed one-time milestone payments based on certain regulatory approvals.

"NX 211 was directly competitive with a product that SmithKline had," Milligan said. "The FTC is always concerned with anyone having too much market share, and it said SmithKline had to divest several products in order for the merger to go through."

That opened the door of good fortune for Gilead, and now that NX 211 is fully in house, the intention is that it will stay there.

"We were thrilled to get worldwide rights to this product," Milligan said. "We have no intention of re-partnering it. We plan to develop it ourselves and to market it in the United States and Europe on our own. We might partner it for marketing in Japan, because we don't have the commercial infrastructure in Japan as we do in Europe and the U.S."

Gilead, of Foster City, Calif., focuses on infectious disease, including antivirals, antifungals and antibiotics, as well as oncology. It has four approved products: AmBisome, for systemic fungal infection; Tamiflu, for influenza virus treatment and prophylaxis; DaunoXome, for Kaposi's sarcoma; and Vistide, for CMV retinitis. It has two products in Phase III: tenofovir disoproxil fumarate for HIV/AIDS and adefovir dipivoxil for hepatitis B. DaunoXome for the indication of acute myelogenous leukemia is in Phase II, and Gilead has several candidates in research for stroke, HIV/AIDS, cancer and bacterial infections. NX 211, however, is the most advanced product in Gilead's oncology portfolio, Milligan said, and is in three Phase II trials for patients with recurrent ovarian cancer and small-cell lung cancer.

NX 211 is a liposomal formulation of the anticancer agent lurtotecan, licensed with worldwide rights from Glaxo Wellcome in 1998. Lurtotecan works by inhibiting topoisomerase I, an enzyme involved in the process of unwinding DNA segments. If DNA can be kept from unwinding, cell replication - and the spread of cancer - may be prevented.

Having the responsibility of NX 211 alone means Gilead will have to pay for it.

"We have slightly in excess of $500 million in cash," Milligan said. "We believe [further development of NX 211] will be affordable. As far as a timeline for Phase III, it will depend on the Phase II trials, but we are anticipating the normal timelines associated with Phase II trials."

Gilead's stock (NASDAQ:GILD) moved up $5.546 Tuesday, or about 9 percent, to close at $65.187.