Physicians' Financial News for May 2007

OBTNMay 2007
Volume 1
Issue 4

Physicians' Financial News focuses on news-making and/or notable companies in the oncology/biotech sector. In this issue: 1) Aveo Lands $477M Deal with Schering Plough 2) Eisai Grows Pharma-Based Cancer Pipeline in $325M Acquisition of Morphotek 3) Pharmacyclic and Genta Appeal FDA Decisions on NDAs 4) Oxford Biomedica Takes Over Oxxon Therapeutics for $31.6M 5) Micromet Could Earn $100M in Collaboration with Tracon 6) Yawkey Foundation Makes Second Largest Individual Donation to Dana-Farber $1B Campaign

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Aveo Lands $477M Deal with Schering Plough


chering-Plough Corporation gained exclusive, worldwide rights to one of Aveo Pharmaceuticals, Inc.’s preclinical-stage antibodies. The transaction could be worth more than $477 million for Aveo.

AV-299 is a highly potent antagonist of hepatocyte growth factor/scatter factor (HGF/SF), which has demonstrated excellent efficacy in preclinical models of human cancer, according to the companies.

“Oncology is a targeted strategic area for Schering-Plough,” commented Steve Galpin, Jr., vice president, financial & strategic communications, “and we are working to grow our portfolio of oncology therapies, both through internal discovery and development and through external opportunities, such as this agreement with Aveo.”

While Aveo considered many firms, Schering-Plough was the best fit. “They had the best appreciation of what we can bring to the partnership with our Human Response Prediction platform; i.e., our ability to use our models to provide unique insights to identify the most responsive tumors and the relevant responsive patient population,” stated Tuan Ha-Ngoc, Aveo’s president and CEO.

Under the terms of the license, Aveo will receive $7.5 million upfront and a $10-million equity investment. Schering-Plough will fund all research and development expenses. Aveo will have primary responsibility for clinical development of AV-299 through proof of concept in man. It will apply its Human Response Prediction platform during a multiyear translational research program to discover biomarker

profiles of patients most likely to benefit from the treatment.

“We anticipate filing for IND during the first half of 2008,” said Ha-Ngoc. “With its mechanism of action targeting the HGF/c-Met pathway, we believe AV-299 has potential anti-cancer applications across a number of tumor types,” added Galpin.

Milestone payments based on the successful development and commercialization of the candidate could exceed $460 million. Upon commercialization, Aveo is eligible to receive royalties on net sales. Aveo retains the option to co-promote AV-299 in the US for certain oncology indications.

Additionally, Schering-Plough’s recognition of Aveo’s strategic desire to participate in the development and commercialization activities, “are very important for us as we continue to advance our two lead clinical programs, AV-951 and AV-412,” added Ha-Ngoc. Aveo reported that its most advanced candidate is AV-951, a novel, oral angiogenesis inhibitor that is highly potent and specific for VEGF receptors 1, 2 and 3. The company plans to file an IND and initiate phase II trials in the second quarter of 2007. AV-412 is an

IND-ready, second-generation, oral EGFR/HER2 inhibitor that could potentially treat patients with solid tumors and is being evaluated in phase I.

Eisai Grows Pharma-Based Cancer Pipeline in $325M Acquisition of Morphotek


isai Corporation of North America (ECA) enters the biologic therapeutics field with the $325-million buy out of Morphotek Inc. The addition of Morphotek’s mAb products to Eisai’s pipeline of small molecule anticancer compounds will compliment the company’s focus on oncology.

“Therapeutic antibodies hold great potential in addressing the unmet medical needs of cancer patients,” said Cathy Pollini, Eisai

spokesperson. “We also believe in the synergistic benefits of monoclonal antibodies with small molecule drugs.”

Eisai’s research and development (R&D) and franchise is based on neurological illnesses, gastrointestinal disorders, and oncology.

Until recently, its portfolio of marketed products reflected only its first two areas of interest: Aricept for Alzheimer’s disease, Aciphex for GERD, Zonegran and Cerebyx for epilepsy, and Fragmin for prevention of deep vein thrombosis.

Eisai’s global plan for 2006, however, put an enhanced emphasis on oncology, according to Pollini. Hence, in October 2006, the company acquired four anticancer drugs from Ligand Pharmaceuticals. These included Ontak and Targretin capsules and gel, approved for certain types of Tcell lymphoma, and Panretin indicated for the topical treatment of lesions in patients with AIDS—related Kaposi’s sarcoma.

To extend its pipeline, Eisai began to evaluate adding therapeutic mAbs to its R&D. “Eisai was originally considering a license type of agreement to gain rights to certain mAbs or mAb technologies,” according to Pollini. “Once we learned of Morphotek’s development pipeline, preclinical candidates and platform we got more interested in an acquisition.”

Morphotek’s technologies include Human Morphodoma and Libradoma. Human Morphodoma generates fully human mAbs. Libradoma

utilizes Human Morphodoma and other proprietary technologies to generate libraries potentially comprised of thousands of hybridomas that can be screened to identify those expressing human antibodies with target affinity profiles. The company’s lead candidate, MORAb-003, is in phase I/II development for ovarian cancer. MORAb-009, is in phase I evaluation for pancreatic and certain types of ovarian and lung cancer.

The most advanced small molecule in Eisai’s own pipeline is E7389 for which a subpart H submission is being prepared. Pollini said it is in a global phase III trial for breast cancer. It is also being evaluated for treating other cancers, such as non-small cell lung and prostate. E7070 for small cell lung cancer, E7820 and E7080 as anti-angiogenesis agents, E7974 as a hemiasterlin type tubulin polymerization inhibitor and E7107 as an anti-tumor agent are all being evaluated in phase I.

Pharmacyclic and Genta Appeal FDA Decisions on NDAs


n April 4, the FDA received two separate forms of appeal on NDA decisions from Pharmacyclic, Inc. and Genta Incorporated.

Pharmacyclic’s NDA sought to market Xcytrin Injection in combination with radiation for the treatment of brain metastases in non-small cell lung cancer (NSCLC) patients. It, however, received a refuse to file letter from the FDA. The company has thus requested that its NDA be filed over protest. “We strongly believe that the clinical data justify a complete and thorough review and that a panel of experts be given an opportunity to examine and evaluate the data,” said Richard A. Miller, MD, president and CEO of Pharmacyclics.

According to the regulations, the filing date was scheduled to be on or about April 30, 2007. The FDA has either four or eight months to review the NDA depending on whether it designates the filing for Priority or Standard review.

“The FDA sent a refuse to file because we didn’t meet our prespecified primary endpoint for the pivotal SMART trial,” according to Dr. Miller. The NDA submission was based on the results of two randomized trials and an integrated analysis of both. The pivotal 554-patient SMART trial showed a 5.4-month improvement in time to neurologic progression, the primary endpoint. The p-value was 0.12, which was not statistically significant. “But, the median time to progression was 15.4 months versus 10.0 months, a large

difference,” Dr. Miller pointed out. Also, the analysis of both the phase III trials did meet the endpoint at 0.016, Dr. Miller asserted.

“I cannot predict the outcome,” concluded Dr. Miller. “We and our many collaborating oncologists believe the data support safety and

efficacy for a patient population that is very ill, for which, no good treatments are available.”

Separately, Genta filed a formal appeal of the non-approvable notice for the company’s NDA for Genasense Injection in combination

with chemotherapy for treatment of patients with relapsed or refractory chronic lymphocytic leukemia (CLL). “The appeal clarifies for senior FDA leadership that Genasense provided substantial evidence of clinical benefit and a favorable benefit-risk balance,” said Andrea Romstad, Genta Investor Relations. “We believe these positions are supported by a consensus in the CLL expert community, whose opinions have been separately communicated to FDA.”

In seeking reconsideration, Genta reiterated that the phase III study, which marks the only randomized, controlled trial ever conducted in this population, met its primary endpoint. Complete responses were more than doubled if the chemotherapy regimen included Genasense compared to chemotherapy used alone.

Responses to such appeals are typically made within 30 to 60 days. “Since we believe the regulatory requirements for approval have been fully met,” added Romstad, “we hope that FDA will decide to approve Genasense for patients with relapsed/refractory CLL. As the FDA noted in granting Fast Track designation to Genasense, these patients have serious medical needs that are not addressed by currently approved therapies.”

The FDA does not comment on a product application until the agency takes an approval action.

Oxford Biomedica Takes Over Oxxon Therapeutics for $31.6M


xford BioMedica will acquire Oxxon Therapeutics in a stock-for-stock transaction valued at $31.6 million. The take over will add to the company’s immunotherapy-focused pipeline and strengthen its intellectual property position in immunology.

In particular, Oxford BioMedica gained a cancer immunotherapy candidate, Hi-8 MEL, which will complement the development of its own investigational TroVax product. Hi-8 MEL targets melanoma, the only cancer that TroVax cannot be used against. “Oxxon’s Hi-8 MEL vaccine has generated encouraging phase II results as a treatment of advanced melanoma,” remarked Alan Kingsman, chief executive of Oxford BioMedica. “The market opportunity for an effective melanoma vaccine is substantial and this is a cancer type where our immunotherapy, TroVax, cannot be developed because, unlike the vast majority of human tumors, melanomas do not have

5T4 on the surface of the tumor cells.

TroVax is Oxford BioMedica’s lead cancer immunotherapy that delivers a novel proprietary tumor associated antigen (5T4) using a pox virus vector. It has been evaluated in clinical trials involving more than 180 patients with various forms of cancer. A phase III trial in renal cancer is ongoing, according to the company. “This acquisition,” Kingsman added, “is part of the implementation of a plan for the development of our pipeline following finalization of a licensing deal for TroVax.”

About two weeks after the Oxxon procurement was proposed, Oxford BioMedica inked a collaboration with sanofi-aventis to develop and commercialise TroVax. Under the terms of the exclusive, global licensing agreement, Oxford BioMedica will receive an initial payment of $29 million and further near-term payments of $19 million as milestones linked to the ongoing co-funded phase III TRIST study in renal cancer. Sanofi-aventis will fund all future research, development, regulatory and commercialization activities, including the immediate implementation of a development plan for TroVax in metastatic colorectal cancer.

Sanofi-aventis will also pay up to $690 million, if all development and registration targets are met for certain defined indications. Additional payments will be made if regulatory milestones are achieved in other cancer types. Oxford BioMedica is also entitled to escalating royalties on global sales of TroVax and to further undisclosed commercial milestones when net sales reach certain levels. Oxford BioMedica retains an option to participate in the promotion of TroVax in the United States and the European Union. It also reserves the right to develop TroVax for other cancer types in exchange for enhanced financial returns, and sanofi-aventis will keep all commercial rights.

Micromet Could Earn $100M in Collaboration with Tracon


icromet, Inc. granted Tracon Pharmaceuticals, Inc. exclusive, worldwide rights to develop and commercialize its D93 antibody for the treatment of cancer.

Micromet gained D93 when it acquired CancerVax in May 2006. It is a humanized, monoclonal antibody that was in preclinical studies for the treatment of solid tumors. Early evaluation showed it targeted cleaved collagen, which is predominantly produced in the extracellular matrix of tumors. It thus inhibited angiogenesis, tumor cell growth and metastasis.

After doing its own research on the candidate, Micromet began to look for a partner, said Christopher P. Schnittker, senior vice

president and chief financial officer. The company found Tracon’s own development of niche products for the angiogenesis field was complimentary to the successful development of D93, he added.

Under the terms of the agreement, Tracon will pay Micromet an upfront fee and milestones of more than $100 million if D93 is successfully developed and commercialized. In addition, Micromet will receive royalties on worldwide sales of D93.

The IND application was filed in 2006. Micromet expects to begin phase I testing of D93 by year end, said Schnittker. Preclinical

studies indicate that D93 has the potential to treat different types of cancer as a single agent and in combination with chemotherapeutics, according to Micromet.

D93 may also be a potential therapeutic for diseases involving neo-vascularization, such as wet age-related macular degeneration.

Micromet’s pipeline consists of two clinical-stage and two preclinical anticancer compounds as well as two anti-inflammatory

compounds. The lead candidate, MT201, is being developed with Merck-Serono. It has completed phase II trials in breast and

prostrate cancer and is in phase I evaluation in combination with Taxotere. The candidate is a recombinant human monoclonal

monoclonal antibody of the IgG1 subclass with a binding specificity to epithelial cell adhesion molecule (EpCAM). Additionally,

BiTE M103 is in a phase I trial in B-cell lymphoma. This product is being evaluated in partnership with MedImmune. M103 is the

most-advanced representative of a novel class of antibody derivatives called Bi-Specific T Cell Engagers (BiTE). The BiTE product

development platform revolves around an antibody-based format that leverages the cytotoxic potential of T cells.

Yawkey Foundation Makes Second Largest Individual Donation to Dana-Farber $1B Campaign


he Yawkey Foundation awarded $30 million to Dana-Farber Cancer Institute. The gift brings the Institute closer to the $150-million goal to build a new out-patient facility it reported in its Mission Possible: The Dana-Farber Campaign to Conquer Cancer.

The Yawkey Center for Cancer Care within the Dana-Farber campus will be the first new clinical building at Dana-Farber since 1976.

The Yawkey contribution is not only the largest giftin its history but is also the largest donation from an individual, according to Susan S. Paresky, senior vice president for development, Dana-Farber Cancer Institute. Richard A. and Susan F. Smith, trustees and long-time supporters of the Institute, donated $50 million, she added.

The donations will be used to accelerate cancer research, bring discoveries to the clinic, and expand Dana-Farber’s patient- and

family-centered care. Between 2001 and 2005, outpatient visits and chemotherapy infusions at Dana-Farber grew by more than 43%, from nearly 128,000 to more than 184,000, according to Dana-Farber. The number of clinical trials available to Dana-Farber patients increased 60%, from 409 trials to 658, it added.

As proposed, the Yawkey Center for Cancer Care will house many of Dana-Farber’s adult clinical services, as well as translational

research space and patient and family services. The 275,000-square-foot building will include 100 exam rooms and 150 infusion beds. The building is expected to be ready for occupancy in early 2011, according to Paresky.

Mission Possible, which seeks to raise $1 billion, has received almost 56% of its goal. As of 28th February, 2007, “we have received donations from individual, corporations, foundation, and organization of all amounts totaling $558 million,” Paresky commented. This early support includes a 96% participation by the Institute’s senior faculty leaders, according to Dana-Farber.

The Institute seeks investments in four areas: Research and Care, Technology, The Center for Cancer Care and The Jimmy Fund and Unrestricted Funds. So far, Research and Care has secured the highest total contribution of $282 million. The goal for this area is $450 million. The Jimmy Fund is 56.3% of the way to achieving its target of $300 million. The Yawkey donation brought the total for the Yawkey Center up to $60 million with $90 million to go. The Technology section has secured $24 million and seeks $100 million. Finally, concludes Paresky, the Institute has raised $23 million in additional funds.

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