By Randall Osborne

West Coast Editor

With its docosanol cream for cold sores still under FDA review, Avanir Pharmaceuticals Inc. signed a $25 million marketing deal with SmithKline Beecham plc.

David Hansen, vice president of commercial development for Avanir, said SmithKline ¿did a lot of due diligence, and satisfied themselves we¿ve done all the right things, and we¿re on the right track to approval.¿

Under the terms of the agreement, London-based SmithKline will handle sales, marketing, manufacturing and distribution in the U.S. and Canada, and will pay an undisclosed up-front license fee to Avanir, and milestone payments up to $25 million.

Those payments are tied to timing of the product launch, and sales-performance criteria at intervals up to one year from the start of sales. The company has considered selling the product over the counter if FDA approval is not forthcoming.

¿Some of it¿s before the launch and some after,¿ said Hansen, who declined to specify the terms further. ¿It was always intended those fees would accrue in the first 12 months.¿

In December 1998, the FDA rejected San Diego-based Avanir¿s new drug application for the cream, saying it was not approvable without more studies ¿ news that sent the company¿s stock plummeting. Avanir met with FDA officials in March 1999, and the company said it was encouraged. No further word has come down from the agency. (See BioWorld Today, Dec. 28, 1998, p.1; and March 19, 1999, p. 1.)

¿At the far outside, it would be June 3, but we were told it will be sooner,¿ Hansen said.

Last year, Avanir signed a letter of intent to license worldwide rights to a drug for treating a condition associated with amyotrophic lateral sclerosis. The deal, with a San Diego-based contract formulation development company called IriSys Research & Development LLC, is based on a patented combination of dextromethorphan and an enzyme inhibitor.

The IriSys deal calls for milestone payments upon NDA filings and marketing approval, with no payments expected in the first two years.

¿We¿re in the final throes of completing that in-licensing agreement,¿ Hansen said. ¿[The drug] comes to us having completed Phase I, with blood-level data. We plan to begin Phase II trials this summer.¿

Avanir also has an allergy treatment in preclinical trials that is expected to enter the clinic next year, Hansen said.

In February, Avanir completed a $6 million private placement financing. The company has $12 million cash, enough to operate for one year to 18 months at current levels, ¿longer if we have to reduce things,¿ Hansen said.

¿That doesn¿t include any of the money from SmithKline,¿ he added.

Avanir¿s stock (OTC BB:AVNR) closed Monday at $3.843, up 9 cents.

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