Nice VEGF trap deal by REGN:
Dow Jones Business News
Aventis Buys Early-Stage Cancer Drug
Monday September 8, 7:30 am ET
By Angela Cullen, Of DOW JONES NEWSWIRES
FRANKFURT -(Dow Jones)- Tapping what could be a major addition to its stable of cancer drugs, Aventis S.A. said Monday it'll pay up to $510 million to U.S. firm Regeneron Pharmaceuticals, Inc. (NasdaqNM:REGN - News) for an early-stage cancer treatment.
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The compound is one of a new class of cancer drugs called VEGF, or Vascular Endothelial Growth Factor, antagonists. They're designed to starve malignant tumors of their blood supply. But the drug, which Aventis refers to as VEGF Trap, is still in Phase I testing and Aventis looks to have paid handsomely despite taking on most of the development work.
Because of this, analysts said it's a risky investment for the Franco-German drugs firm. Only about 10% of Phase I drugs actually make it through the development process to sell on pharmacy shelves. Also, it doesn't solve Aventis' more immediate problem of filling its late-stage pipeline before generic competitors erode sales of its top-selling drugs.
Aventis will pay $125 million - $80 million in cash upfront and $45 million by taking a stake in Regeneron - for the drug immediately. It'll also pay $25 million for an early milestone and another $360 million in further milestones relating to up to eight marketing approvals for the drug in Europe and the U.S.
It'll also fund the remaining clinical development of the drug.
Regeneron has agreed to refund 50% of those costs if the partnership becomes profitable, and the companies will equally share promotion rights and global profits.
The deal highlights the strength of U.S. biotechnology companies in negotiating high-value transactions with pharmaceutical companies pressured by depleting product pipelines, analysts said.
In a research note, Nomura analyst Sam Fazeli said the deal is "a sign of the continued strength in the U.S. biotech sector."
"This is the first time we have seen such a deal where the biotech company has the upside of 50% of the profits, without taking the upfront developmental risk. We also believe that this is quite a big deal for a Phase I product," he said.
Another analyst, who declined to be named, said: "It's nice to see they're ( Aventis) beefing up their oncology pipeline, but it doesn't change much. If the drug becomes a big one, then it will be worth it, but it's very early yet."
Aventis said it's finalizing the development plan for the drug and will be in a position in two or three weeks to indicate when it expects to file for marketing approval.
It plans to take a fast-track approach and conduct clinical research simultaneously on a number of cancers, including colorectal and prostate cancer as well as any other indication that demonstrates a positive response in Phase I trials.
"We are going to move very aggressively and do a lot of the development in parallel," said Frank Douglas, Aventis' vice-president for drug innovation and approval, in a conference call to discuss the transaction. Douglas is also a member of Aventis' management board.
"To give a sense of the commitment that we have to this approach, there are probably four or five solid tumors that we will start off in parallel," he said.
Recent late-stage clinical data on another VEGF antagonist, Genentech Inc's Avastin, "has validated this approach in the treatment of solid tumors," Douglas said.
Avastin was recently shown to improve the survival of patients with metastatic colorectal cancer, and pre-clinical data demonstrates that Regeneron's VEGF antagonist is also an "extremely potent blocker of VEGF," Douglas said.
VEGF Trap "is one of the most promising investigational oncology compounds currently under study. This is a highly significant partnership for Aventis as blockage of VEGF is at the leading edge of innovative, targeted cancer therapy," he said.
Analysts estimate Avastin will reap more than CHF700 million in sales from 2007 onward. If Aventis were to aim for similar sales, Monday's deal would be a worthwhile investment, but it will likely be several years before the drug reaches the market, analysts said.
Aventis said it may be interested in other products in Regeneron's pipeline, but said it's focusing on the VEGF Trap for now.
"We work very hard at being a preferred partner for Regeneron," said Frank Douglas, management board member and executive vice-president of Aventis' drug innovation and approval in a conference call to discuss the transaction.
At 1101 GMT, Aventis shares were flat at EUR46.30 in Frankfurt.
Company Web site: aventis.com
-By Angela Cullen, Dow Jones Newswires; 49 69 2972 5500; angela.cullen@dowjones.com -0- 08/09/11-03G
As I had said back in July:
For REGN I'm just patiently waiting for a juicy VEGF trap partner.
Message 19154825
Peter |
