By Mary Welch

AltaRex Corp. has received word that Purdue Pharma LP will not exercise its option on a $100 million deal to develop AltaRex's OvaRex MAb and BrevaRex MAb.

"It came out of the blue, without any explanation," said Edward Fitzgerald, senior vice president and chief financial officer for AltaRex. "We received notice this week in a one-sentence letter, followed up by a one-minute phone call. We're left in the dark. As far as we were concerned, everything was progressing fine. They were doing due diligence and the trials were proceeding. There is nothing inherent in the progress of the trials to cause them to say that this would be something they wouldn't want to continue."

Purdue Pharma did not return phone calls.

As a result, AltaRex will have to "reduce our burn rate, go and raise money and look for new partners," he said.

The company had been moving employees from its main office in Edmonton, Alberta, to its executive offices in Waltham, Mass., but will re-assess that strategy, partially to help ward off any potential layoffs, Fitzgerald said.

In addition, the company has resumed talks with potential suitors, some of whom had started due diligence prior to the company making the deal with Purdue.

"We've been in talks with a number of potential partners over the last 24 hours," he said. "There is a lot of interest."

AltaRex granted Purdue an option to an exclusive worldwide license to develop and commercialize its two lead antibody drugs (see BioWorld Today, May 14, 1999, p. 1.) In the agreement, Purdue pledged more than $100 million to AltaRex in research and development funds over the next three years, as well as milestones. Purdue also made a $3.4 million purchase of AltaRex common stock.

The 180-day license allowed Norwalk, Conn.-based Purdue time to exercise due diligence, but at the time, the companies said the announcement wouldn't have been made without full expectation that the deal would be consummated. The 180 days would have ended Nov. 12.

AltaRex's products are based on a proprietary platform technology, Anti-idiotype Induction Therapy, which the company believes enhances the ability of the immune system to produce a highly effective anti-tumor response.

OVARex MAb is currently in two potentially pivotal Phase IIb trials and two open-label Phase II studies in late-stage ovarian cancer patients who have completed first-line treatment.

"These are women who have had surgery or chemotherapy and know that there is a 90 percent chance of re-occurrence," said Chris Nicodemus, senior vice president of clinical research and development. "They are just waiting for the cancer to come back."

The lead trial is registering 300 patients and expects the trial to last until 2001, with a biologics licensing application (BLA) to follow.

Its second product, BrevaRex Mab, is in Phase I for several cancers, but the first indication would probably be multiple myeloma.

"Although there have been no safety issues found in the BrevaRex trial, we now have to focus our efforts on OvaRex and continue to be well-positioned to file the BLA on time," Fitzgerald said. "We may have to slow down the timetable for BrevaRex for now."