By Randall Osborne

West Coast Editor

Triangle Pharmaceuticals Inc., forging ahead despite unfavorably viewed news this spring about a late-stage trial of its lead HIV drug, nailed down its second antiviral deal in recent months: a multi-year agreement with London-based Arrow Therapeutics Ltd.

Financial terms were not disclosed regarding the research and development collaboration, but the companies said a target has been identified.

"It's for hepatitis C," said Carolyn Underwood, vice president of commercial operations for Triangle. "We already have three compounds with activity in hepatitis B."

Arrow is contributing the target, high-throughput screening technology and compound library. Triangle will handle preclinical and clinical work, paying an up-front fee, milestones and royalties on eventual sales. The deal is for two years initially, renewable for two more, and open for further extensions after that.

With its high burn rate - $10 million per month - Triangle shapes deals with small up-front payments, Underwood said.

"A lot of [the burn] is external, so we can slow it down or speed it up as we need to," she added, but the research-based agreement with Arrow is designed for most of the money to be paid as milestones.

"Only if they're successful do you start getting into the bigger bucks," Underwood said.

Triangle, of Durham, N.C., which focuses on HIV and hepatitis, heard in April from the South Africa Medicine Council that a 470-patient, Phase III study of its anti-HIV drug, Coviracil (emtricitabine), should be stopped because of possible liver toxicity issues. (See BioWorld Today, April 7, 2000, p. 1.)

Coviracil is Triangle's furthest advanced drug candidate.

"There was liver toxicity," Underwood said, "but we've convinced South African authorities as well as the FDA that the toxicity is not likely attributed to our compound."

The trial, which continues, is a comparison of Coviracil and the market-leading lamivudine (3TC) when used in combination with Zerit (d4T) and nevirapine.

Underwood said it's "no secret" that nevirapine causes liver toxicity, although it was not definitively identified as the culprit in the trial.

"Enrollment had been terminated, but the trial was essentially completely enrolled," she added. "We've passed 24 weeks, and we're hoping to carry the trial through its full 48 weeks. The news was viewed very negatively by [Wall] Street, but hopefully will be viewed as more positive," once data from it become available, she added.

"There's an element of the FDA starting to look at HIV drug candidates a bit more like they look at other drug candidates, as opposed to always looking at accelerated approval," Underwood said. "They're getting a bit more stringent about what they're going to require. Part of the issue is that there are now 15 approved [HIV] drugs."

The same month as the Coviracil news was disclosed, Triangle entered a deal with Dynavax Technologies Corp., of Berkeley, Calif., for DNA-based immunostimulatory therapies for HIV, as well as for treating and preventing hepatitis B and hepatitis C infections. (See BioWorld Today, April 5, 2000, p. 1.)

The collaboration is based on privately held Dynavax's immunostimulatory DNA sequences, and is aimed first at finishing studies to support their use for hepatitis B treatment. Hepatitis C is next, then HIV.

In the Dynavax deal, Triangle bought $2 million in Series T preferred Dynavax stock, and provided research funding, milestones and royalties. Other details were not disclosed, but Underwood said the Dynavax arrangement is similar to Arrow's.

"They complement each other," she said.

At the end of the first quarter, Triangle had $135 million in cash, and expects to disclose second-quarter figures in the next few days. Underwood said it would reflect lower cash according to the burn rate, but no other significant losses. The firm has 37.6 million shares outstanding.

Arrow, an antimicrobial-research company, raised $16.75 million last month in its second round of venture capital financing. The company has five main research programs and lead compounds identified in three, including the areas of aromatic amino acid biosynthetic pathway inhibitors and serine protease inhibitors. Arrow plans to begin Phase I development with at least one compound in the next 12 months.

Triangle's stock (NASDAQ:VIRS) closed Monday at $9.875, down 6 cents.