By Mary Welch
QLT PhotoTherapeutics Inc. has proposed to sell the worldwide rights to Photofrin - an anticancer agent that was the first photodynamic therapy to win regulatory approval - to Axcan Pharma Inc. in a deal worth up to C$60 million (US$40.5 million).
Under the terms of the pact, QLT will transfer to Axcan the worldwide development, manufacturing and marketing rights to Photofrin (porfimer sodium) in exchange for a financial package that includes;
¿ an initial net cash payment of C$2.5 million ($1.7 million) and a C$4 million ($2.7 million) deferred payment;
¿ approximately 1.2 million shares of Axcan's common stock (TSE:AXP) and C$13.5 million ($9.12 million) in preferred shares of Axcan that are redeemable within 12 months in cash or additional common shares of Axcan; and
¿ future milestone payments of up to $20 million ($13.5 million), payable in cash or preferred shares.
"Last year we terminated our European partnership with Beaufour Ipson [Beaufour Ipson Group of Paris]," said Kenneth Galbraith, executive vice president and chief financial officer of Vancouver, British Columbia-based QLT. "While in the course of looking for a new partner for Europe, we considered a number of options and realized that the best thing for us was to divest the entire package globally to one company that will make the most of it."
QLT had previously executed marketing and distribution deals for Photofrin with Wyeth-Ayerst's Japan subsidiary for Japan; San Diego-based Ligand Pharmaceuticals Inc. for Canada; and Paris-based Sanofi-Synthelabo Inc., for the U.S. and the Caribbean.
As part of the Axcan deal, QLT will terminate the deal with Ligand and will reacquire rights from Sanofi-Synthelabo. The company will also assign Japanese royalty rights under its agreement with Radnor, Pa.-based Wyeth-Ayerst to Axcan.
When the deal is finalized, Axcan of Mont Saint-Hilaire, Quebec, will assume responsibility for the marketing of Photofrin and future costs and obligations. Sanofi-Synthelabo will receive a portion of the consideration payable to QLT under the arrangement. Wyeth-Ayerst in Japan will continue to distribute Photofrin in that country.
In addition to the financial incentives, Galbraith said that Axcan is better suited to market and develop Photofrin than QLT.
"Photofrin is a pretty good product with sales of about $10 million U.S.," he said. "It's quite a small product and it's being used in about 150 centers with quite effective results. But it will take some work to gain market share. We wanted to take our resources to grow Visudyne and grow our pipeline."
Visudyne (verteporfin) was approved earlier this month by the FDA to treat wet age-related macular degeneration. It is being marketed with partner CIBA Vision Corp., of Atlanta. (See BioWorld Today, April 14, 2000, p. 1.)
Photofrin's best hope for large-market acceptance is for Barrett's esophagus, Galbraith said. The product is in a Phase III trial at 35 centers in North America and Europe as a treatment for high-grade dysplasia associated with Barrett's esophagus, a pre-cancerous condition resulting from prolonged acid reflux, also known as heartburn. Barrett's esophagus causes the lining of the esophagus to transform into tissue similar to that lining the stomach, making the tissue more susceptible to cancer. A new drug application is slated for filing in 2001.
"When it becomes approved for that indication - and it could become a big indication - it will be less an oncology therapy and more a gastroenterology drug," Galbraith said. "Gastroenterology is beyond our focus and it is not in the domain of Sanofi . What is so great about Axcan is that they are one of the few biotechnology companies with a dedicated gastroenterology sales force in North America. They will be able to capitalize on the drug."
The deal should close by the end of the second quarter.
"We will realize a one-time gain or about $10 million to $11 million - U.S. - in the second quarter of this year," Galbraith said. "And of course we will receive future milestones after that."
Photofrin is approved for three indications. In 1995, the FDA approved it as a palliative treatment for certain patients with esophageal cancer. In 1998, it was cleared for early-stage micro-invasive lung cancer in patients who are not candidates for surgery or radiotherapy. That same year, it got the nod for the palliative treatment of late-stage lung cancer. (See BioWorld Today, Sept. 8, 1998, p. 1., and Dec. 29, 1998, p.1.)
The drug is administered intravenously and collects in and around tumor cells. When activated by the nonthermal light from a laser, it produces toxic oxygen compounds, which disintegrate the tumor cells. Necrotic tissue and exudate are subsequently removed through a bronchoscope.
QLT's stock (NASDAQ:QLTI) closed Monday at $58.562, up $3.