By Nancy Volkers
Special To BioWorld Financial Watch
Over the past 18 months or so, biotech companies have struck deals with other biotech companies at a rate of one every other day. Though these deals aren't usually the largest, and they don't always make headlines, they are a necessary part of the industry.
"Typically, there's very little money" in a biotech-biotech deal, said Jon Alsenas, managing director at ING Baring Furman Selz LLC in New York. "There's one overriding reality of life for these biotechs they're busy spending money. Their resources are constantly dwindling. As time goes on there's less public market interest, so they need to spread the risk; they've got to collaborate in many cases."
Drugs and biologics to diagnose, treat and prevent cancer still are barreling through biotech pipelines. Biotech companies are working together to develop compounds that range from genetic markers to immunotherapies. BioWorld's latest Phase II/III Report has 88 entries in the "cancer" category, listing 70 different compounds being researched for an oncology indication. Last year, 78 compounds were in trials for cancer, the most for any disease category. Coming in a distant second was infectious diseases, with 30 drugs in trials.
Angstrom Pharmaceuticals Inc., a private company based in San Diego, signed its first collaboration in March, partnering with Diatide Inc. to develop radiopharmaceuticals for cancer. Diatide, of Londonderry, N.H., received exclusive worldwide rights to imaging and certain therapeutic products developed from Angstrom's proprietary tumor-targeting technology. Angstrom received an up-front payment and can get milestone and research payments as well as sales royalties.
Angstrom has developed small cyclic peptides that bind tightly and specifically to the urokinase plasminogen activator receptor (uPAR), a key receptor found in virtually all solid tumors and rarely in healthy cells. By blocking uPAR, the events leading to angiogenesis and, ultimately, metastasis are blocked. Targeting uPAR with an imaging agent would allow selection of patients that would benefit from uPAR therapy.
Other therapeutic agents central to recent deals include antisense and dendritic cell immunotherapy. Isis Pharmaceuticals Inc., of Carlsbad, Calif., and Dublin-based Elan Corp. plc signed a deal to develop oral antisense therapies for a variety of diseases, including cancer.
The focus of the collaboration is making orally available antisense drugs; currently, antisense compounds are given intravenously. Elan and Isis will focus initial efforts on an inhibitor of tumor necrosis factor-alpha (TNF-a), which is implicated in a number of inflammatory diseases such as rheumatoid arthritis.
"We have learned how these things are absorbed orally they're absorbed in the colon," said Stanley Crooke, president and CEO of Isis. "The first step was to improve stability. We can combine the new chemistry with formulations that have penetration enhancers." In animal studies, Crooke said, the company has seen 25 percent to 30 percent availability.
"Now, we need to convert what we've done and make a capsule or tablet," Crooke said. "That's not basic research but it's still plenty tough. That's why we did the deal with Elan. We receive $15 million in equity at a premium and a budget to get to oral delivery. In addition, Elan has a lot of expertise in exactly the areas we need it how to get from what we have to tablets."
Crooke continued, "It's expensive and we want to make sure we get it right. But I would hope in the next 12 to 18 months we would file the next IND [investigational new drug application] for an oral agent."
In May, Dendreon Corp., of Seattle, and the Pharmaceutical Division of Tokyo-based Kirin Brewery Co. Ltd. established a research and license agreement that provides financial support for Dendreon's development of dendritic cell therapy. Dendreon will keep U.S. rights and will be a joint marketing partner in Europe, while Kirin gets rights in Asia and Oceania. The agreement broadens a relationship between the companies that began last year.
"One of our strategies has been to focus our development attention in North America, particularly the United States," said David Urdal, chief scientific and operations officer at Dendreon. "We're relatively small, so part of our strategy has been to find companies that show interest in marketing in other territories. Kirin has been interested in the work we were doing and has a pretty sophisticated research group focusing on products that use the immune system to treat cancer. For us they represented a great fit, and have a great history in the biotech arena."
Dendritic cells are a component of white blood cells and the most powerful stimulators of immune response. They initiate the production of killer T cells. In Dendreon's therapy, dendritic cells are isolated from the blood using the company's proprietary technology and "activated" with cancer antigens, then reinfused.
"We're getting data that validate continued interest in this approach," Urdal said. "We'll be going into Phase III for prostate cancer we have had several discussions with the FDA on the design of our Phase III program, which we'll be initiating in the next month. We're catching the attention of a lot of companies, now that we're talking about Phase III."
Trials of dendritic cell therapy in multiple myeloma are in Phase II, and Dendreon plans to submit an IND later this year for studies in breast cancer.
In addition to the agreement with Kirin, Dendreon has partnered with BioTransplant Inc., of Charlestown Mass., and Osiris Therapeutics Inc., of Baltimore. Both companies have purchased rights to use Dendreon's cell-separation technology.
In June, Vysis Inc., of Downers Grove, Ill., and Eos Biotechnology Inc., of South San Francisco, entered into a collaboration to validate new breast cancer markers. Eos will contribute breast cancer targets gathered through its various genomics technologies. Vysis will validate the genes through its fluorescence in situ hybridization (FISH) technology.
"We became involved with Vysis because we share the interest in the oncology field," said Gayle Mills, Eos' vice president of business development. " [The collaboration] allows us to expedite development of an application of our own research without building that expertise internally."
Mills said, "It has boundaries, so that we still have not partnered all of our diagnostic rights away. We still have assets we can partner at a later date. That's one of our major considerations in entering collaborations making sure that you don't partner away rights too early. Sometimes it makes sense to pay for a technology, rather than provide rights."
In 1998, Vysis' first year as a public company, revenues for its core genetics products increase by 45 percent to $17.7 million. Total revenues increased by 28 percent to $23 million. Last year, the FDA approved Vysis' HER-2 breast cancer product.
"It turns out that the HER-2 gene sits on chromosome 17," Vysis President John Bishop said. "Thirty percent of breast cancer patients will end up with more copies, sometimes substantially more copies, of the HER-2 gene. There's data we've seen that [show] patients at the highest risk and the ones for which the therapies are most effective, are those that are amplified. The FISH test detects that directly."
Any biotech company, Alsenas said, is "dealing with something that's very long-term and very high-risk," so partners help ease the way. "If you're a Vysis, which has expertise in developing the kit but not in gene discovery, they can't go forward without help. Eos, on the other hand, can discover genes, but they're not set up to develop and market the final product."
Mills said, "Each collaboration has a different business structure, but each provides new capabilities without us having to build an internal infrastructure. One of the important aspects of Eos' philosophy is that we really think it's impossible for any biotech or any pharma to become so inwardly focused that their reason for being is developing only their own technologies."
Thus, deals between biotechs typify symbiosis "or at least commensalism," Alsenas said.