By Randall Osborne
West Coast Editor
SuperGen Inc. added a strong player to its oncology portfolio by paying $20 million in cash and stock to AVI BioPharma Inc. for U.S. marketing rights to the cancer vaccine Avicine, slated to begin Phase III trials by mid-year.
The deal ¿functions like a joint venture,¿ said Denis Burger, president and CEO of Portland, Ore.-based AVI, which will split clinical costs and regulatory expenses with SuperGen, as well as profits.
¿If you run all the numbers, this should work out to be equivalent to a 37 percent royalty,¿ Burger said, more than double the 15 percent royalty commonly paid by big pharma.
AVI might still end up with the much-sought cash of big pharma¿s involvement. Late last year, SuperGen signed a potential $150 million cash-and-equity deal with Abbott Laboratories, of Abbott Park, Ill., for worldwide marketing of the cancer drug rubitecan ¿ and the international rights for Avicine remain unclaimed. ¿Of course, we¿re thinking about Abbott,¿ Burger said. (See BioWorld Today, Dec. 23, 1999, p. 1.)
Under the terms of the Avicine agreement, SuperGen, of San Ramon, Calif., gets an option to buy 10 percent more of AVI¿s common stock (NASDAQ:AVII) that is outstanding at the time of the exercise, at a price of $35.625 per share, which is 300 percent of Tuesday¿s closing price of $11.875 per share. If it happened today, it would entail 1.75 million shares at $62.3 million.
AVI¿s stock closed Wednesday at $12.562, up 68.7 cents. SuperGen¿s stock (NASDAQ:SUPG) closed Wednesday at $46, up $2.875.
SuperGen will own 13 percent to 15 percent of AVI when the equity deal is complete, said Joseph Rubinfeld, chairman and CEO of SuperGen.
¿We patterned this after the Abbott deal,¿ Rubinfeld said. ¿I learned.¿
In addition to the Phase III trial for colorectal cancer, expected to begin in a few months, Avicine is being tested in a Phase II study for pancreatic cancer ¿ the second such study ¿ and a Phase II trial for prostate cancer is planned for mid-year.
AVI is providing SuperGen rights to first discussion of its other compounds as part of the agreement, Rubinfeld said.
¿They¿re in a variety of things not in the mainstream for SuperGen¿s business [such as anti-infectives],¿ but the move looks wise as an equity investment, he said.
The Avicine deal took some extra time to complete. In December, SuperGen paid $5 million to keep exclusive negotiating rights in the U.S. until the end of February, acquiring 7.5 percent of AVI¿s outstanding common stock in exchange for a $2.5 million payment and 100,000 shares of SuperGen. (See BioWorld Today, Dec. 27, 1999, p. 1.)
¿It¿s more equity,¿ Rubinfeld said. ¿It¿s like we¿re buying a chip, using mostly our own shares.¿
Burger said the wait was worthwhile.
¿Once you have an approved Phase III protocol, whether its big pharma or SuperGen conducting the trials with us, the data¿s going to be the same,¿ he said. ¿Then the question is, Can two small companies afford it?¿ We can.¿
To have Abbott handle overseas marketing would be a bonus, but Rubinfeld said Abbott, which boasts a ¿monster sales force,¿ has made no moves in that direction.
¿We haven¿t approached them and they haven¿t approached us,¿ he said.
Avicine is designed to boost the immune system in fighting an existent cancer. It prompts an immune response by targeting a tumor-associated antigen: human chorionic gonadotrophin, a hormone with which malignant tumors usually are coated.
The vaccine has been tested in five trials in more than 200 patients. Results from a Phase II study for advanced colorectal cancer demonstrated that patients who responded to the peptides in the vaccine showed what AVI described as ¿significant survival benefits¿ compared to patients treated with chemotherapy alone.
In February, SuperGen registered to sell 2 million shares in a public offering. In September, the company raised $16.6 million in a private placement designed to help fund its clinical programs for rubitecan and Nipent, its approved hairy-cell leukemia drug that is being proposed for additional indications, as well as for other oncology programs. (See BioWorld Today, Feb. 16, 2000, p. 1; and Sept. 8, 1999, p. 1.)