By Mary Welch
The Immune Response Corp. may receive as much as $77 million over the next two years in a deal with Agouron Pharmaceuticals Inc. to jointly develop and commercialize Remune, a therapeutic vaccine for treatment of HIV.
The Immune Response Corp. (IRC), of Carlsbad, Calif., received a $10 million up-front licensing fee and could realize another $35 million in milestone payments. As part of the collaboration, IRC also will receive $18 million to support development. The firm posted 1997 revenues of $2 million.
La Jolla, Calif.-based Agouron will spend $14 million to purchase IRC stock over the next two years. The first purchase was 118,256 shares for $2 million. The $16.91 per-share price represents a 23.5 percent premium to the $13.687 close Thursday of IRC's stock (NASDAQ:IMNR).
"One way to look at this is that for the next six quarters, Agouron will pay us $5 million," said Charles Cashion, senior vice president and chief financial officer. "Of that $5 million, $3 million will be for product development — clinical studies and manufacturing. The other $2 million will be to purchase stock."
The stock purchases won't take up a large chunk of the company's outstanding shares, Cashion said. "It'll probably be about 700,000 shares when it's finished. We have 23 million outstanding shares now, so it's not a lot. We have institutional investors with a larger share of the company."
Although neither company will estimate what Remune's sales will be when it comes to market, both companies will share Remune's profits on an equal basis.
According to Cashion, Agouron's involvement does a lot for Immune Response. "It's a great opportunity to obtain large visibility for Remune because we are now associated with the market leader in HIV. Agouron is very focused on HIV," he said.
In addition, the influx of money is "something everyone wants." The deal also allows IRC to avoid starting a sales and marketing arm.
"Another benefit is that Agouron's sales and marketing efforts are very successful and sophisticated. They've been very successful with the launch of Viracept last year."
Viracept is Agouron's HIV protease inhibitor for the treatment of adults and children.
Agouron said it was pleased to have been chosen by IRC to take Remune to market. "There were other companies interested in the drug and we're excited to be working on this," said Donna Nichols, vice president of corporate communications. "We believe that the immune-based drugs will redefine the future of combinational therapy."
Remune is currently in Phase III trials in 74 sites across the country with 2,500 patients with HIV who do not have full-blown AIDS (CD4 counts between 300 and 550). Remune is inactivated HIV combined with a mineral oil-based adjuvant and is designed to stimulate a patient's own immune defenses to fight the virus.
All the patients in the trials continue on their current antiviral treatments. Remune is injected into a patient's muscle four times a year. The Phase III studies, which started in March 1996, are expected to go through the first quarter of 1999. The endpoints are whether the drug can delay progression of the disease and increase survival. (See BioWorld Today, March 18, 1996, p. 1.)
Marketing Application Expected In 1999
If all goes well, the companies expect to file a marketing application with the FDA by the third quarter of 1999.
IRC has indicated preliminary data are encouraging from the trials of Remune taken with highly active antiretroviral drugs. Detailed findings will be delivered at this month's 12th World AIDS Conference, in Geneva. Those results helped convince Agouron on the benefit of the collaboration, Nichols said.
As of March 31, Agouron reported $330 million in total revenues for the first nine months of its fiscal year 1998. Of that amount, Viracept, which has been sold since March 1997, accounted for $283 million. The drug already has captured 40 percent of the HIV protease inhibitor market and Agouron expects sales to reach $350 million for the fiscal year. The company said it anticipates conducting a Phase II trial using Remune in combination with Viracept.
IRC and Agouron disclosed their deal after the market closed Thursday. Agouron's stock (NASDAQ:AGPH) ended the day at $34, down $1. *