Pullan Consulting

Biotech Business Development Consulting

www.pullanconsulting.com and www.lindapullan.com

email:  lpullan@msn.com  805-558-0361

Issue #35, May 2009

Pullan's Pieces

Commentary on Science & Business of Drug Development

How many gene variations contribute to common diseases?

            Genome-wide associations have identified many variations in genes and non-coding regions that contribute to risk of disease, but for the common diseases such as diabetes and Alzheimer’s, the magnitude of risk explained by the genomic variations to date is very small.  For example, Goldstein (NEJM 360:17, 1696-1698) estimates, with 20 polymorphisms identified to date contributing to less than 3% of the variability, to that to explain 80% of the population’s variation in height would need 93,000 SNPs (single nucleotide polymorphisms).  In addition to the need for statistical rigor in the complex analysis of huge quantities of data, another challenge is it is likely that most changes will contribute in a graded intermediate way rather than a dichotomous high risk / low risk way.  For any gene, many elements contribute to the regulation of its expression, and changes in these regulatory elements can each contribute a bit to the cumulative risk profile (nicely reviewed by Hardy and Singleton, NEJM 360:17, 1759-1768).   This means that while genome wide associations are building understanding of pathways and networks in biology of disease, the predictive value of gene changes in a given individual are currently very low. 

            But what fascinates me is the concept that hundreds of gene changes will be found to contribute to most diseases.  This means, even with clustering of changes in some smaller set of biologic pathways, that schizophrenia, like breast cancer, may need many different diagnostics and many therapeutics tailored to the many subtypes.  Increasingly personalized medicine will be necessary for drug development.  The cost effectiveness and reward systems of our industry will have to adapt to the more detailed understanding of the biology of disease. 

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Deal Analysis: Indication Splitting in the Immunomedics Nycomed License for anti-CD20 Antibody

Nycomed received a worldwide license to Immunomedics’ humanized anti-CD20 antibody, veltuzumab, in a subcutaneous formulation for the treatment of rheumatoid arthritis and all other non-cancer indications.  Immunomedics retained the right to develop, manufacture and commercialize veltuzumab in the oncology field. Immunomedics retained an option to solely promote veltuzumab for the treatment of immune thrombocytopenic purpura (“ITP”) in the United States. The agreement provided for Immunomedics to continue an ongoing Phase I/II study of veltuzumab in ITP at Nycomed’s expense.   Nycomed paid Immunomedics an up-front cash fee of $40 million and agreed to pay clinical, regulatory and sales-based milestone payments up to $580 million and escalating double-digit royalties on net sales of veltuzumab by Nycomed, its affiliates and sublicensees.  The allocation of profits between the parties where Immunomedics exercises its promotion option was not disclosed.

Nycomed and Immunomedics

Nycomed GmbH is a private, fully-integrated prescription and OTC pharmaceutical company, headquartered in Zurich, Switzerland with approximately 12,000 employees.  Nycomed was spun off Nycomed Amersham in 1992.  In 2008, Nycomed had total revenues of € 3.3 billion.  In-licensing areas are inflammation, pain, gastrointestinal, osteoporosis, respiratory diseases and tissue management. Nycomed acquired Altana Pharma (gastroenterology and respiratory) in 2006 and Bradley Pharmaceuticals (dermatology) in 2007, and in 2008, Nycomed sold oncology programs to 4SC and Bayer Schering.  Nycomed is actively seeking a buyer for the company. 

Immunomedics, Inc. is a publicly traded, New Jersey-based, biopharmaceutical company focused on developing monoclonal antibodies to treat cancer and other serious diseases.  It had a market capitalization of approximately $71 million as of March 31, 2009.  In 2006, Immunomedics licensed to UCB the right to its CD22 antibody epratuzumab for autoimmune diseases, in a deal with an upfront payment of $38 million and potential milestone payments of up to $145 million and $20 million in equity investments.

Veltuzumab is the first anti-CD-20 antibody developed as a subcutaneous formulation

            Veltuzumab (hA20; IMMU-106) is a humanized anti-CD20 monoclonal antibody having 90-95% human antibody sequences. Because veltuzumab differs from rituximab by one amino acid in the complementarity region, antibody-dependent cell-mediated cytotoxicity, apoptosis and growth inhibition are similar between rituximab and veltuzumab. However, veltuzumab has a significantly lower off-rate (increased residence time) in all lymphoma cell lines tested, and demonstrates significantly higher complement-dependent cytotoxicity in certain human lymphoma cells in vitro. Veltuzumab is the first subcutaneously applied anti-CD20 antibody tested in clinical trials. A Phase I/II clinical trial in ITP (continuing with subcutaneous dosing) is expected to be completed in 2009.  It is also in a Phase I/II clinical trial in non-Hodgkins lymphoma and chronic lymphocytic leukemia with intravenous and subcutaneous dosing.  A phase II clinical trial in rheumatoid arthritis with the subcutaneous formulation is expected in the third quarter of 2009. 

Large, crowded market.  Subcutaneous could be a real advantage

            Rituximab (marketed by Biogen Idec and Genentech as Rituxan in the U.S. and as MabThera by Roche in the rest of the world)  is a chimeric (mouse and human) antibody that binds to the surface protein CD20 on B cells to deplete B cells through antibody dependent cellular cytotoxicity (ADCC) and complement dependent cytoxocity (CDC).  It is approved in non-Hodgkins lymphoma, rheumatoid arthritis and in the EU for chronic lymphocytic leukemia (CLL).  Sales in 2008 were $2.6 billion in the U.S. and in rest of the world Roche sales were $5.2 billion.  It is approved as an intravenous infusion, but subcutaneous administration of fractionated doses has been studied in CLL. 

            Additional antibodies without the mouse sequences of the chimeric antibody (for less risk of an immune response or anaphylaxis to the foreign sequences) or with enhanced ADCC are in development.  Glaxo and Genmab have Ofatumumab (Arzerra; HuMax-CD20), a fully-human antibody in pre-registration.  Genentech has a humanized version of rituximab, Ocrelizumab, in Phase III and a 3rd generation version Afutuzumab, with glycosylation for increased ADCC, in Phase II.

            Other companies have anti-CD20 antibodies in Phase II clinical trials.  Eli Lilly has AME-133, a humanized and optimized antibody with greater affinity and enhanced ADCC.  Wyeth and Trubion have an antibody-like recombinant small modular immunopharmaceutical protein (SMIP) with CD20 binding and ADCC and CDC activity.  Trion and Fresenius have a trifunctional anti-CD20 and anti-CD3 antibody. 

            Additional companies have Phase I and preclinical antibodies aimed at CD20.  Immunomedics has a preclinical pretargeting radiolabelled system to deliver radioactivity to CD20 labeled cells with a trivalent bispecific antibody. 

            For chronic indications such as rheumatoid arthritis, indolent non-Hodgkins lymphoma and even CLL, subcutaneous dosing is certainly more convenient for patients.  It is also possible that lower, more frequent subcutaneous doses can avoid deleterious effects of the high concentrations initially achieved by intravenous doses.  Subcutaneous dosing volumes are quite small and this may limit the efficacy of less potent antibodies compared to the larger volumes that can be achieved with intravenous infusions.  Veltuzumab is the first subcutaneously applied anti-CD20 antibody tested in clinical trials.

Commercial Terms Roughly Comparable to Phase I or II Antibody Deals

The deal value for the Nycomed and Immunomedics deal is comparable to other clinical stage antibody deals.  Nycomed paid Immunomedics an up front cash fee of $40 million.  Potential clinical, regulatory and sales-based milestone payments total $580 million.  Immunomedics will also receive escalating double-digit royalties on net sales of veltuzumab by Nycomed, its affiliates and sublicensees.  In the event Immunomedics exercises its promotion option, the parties will share profits from sales of veltuzumab for the treatment of ITP in the United States in accordance with an undisclosed allocation between the parties. While veltuzumab is listed as a Phase II product, it should be pointed out that as of signing, no Phase II studies had been initiated in Nycomed’s indication of primary interest, rheumatoid arthritis.

Indication split addressed by trademarks, dosage forms, and physician audience

            Indication Split.  One of the most noteworthy aspects of this transaction is that the parties elected to split clinical indications in several different ways.  First, they allocated non-oncology indications to Nycomed and oncology indications to Immunomedics.  A principal consideration when indications are split within the same geography between two commercializing parties is whether the parties will be able to obtain sales in each other’s indications due to off-label sales.  In this regard, the parties appear to have carefully considered the matter and structured the transaction in a way to minimize the risk of off-label sales between the two sets of indications.

Ÿ         Trademarks.  The agreement does not provide for a product trademark license between the parties.  Their intent is that Nycomed will commercialize veltuzumab under one trademark in non-cancer indications, and Immunomedics will commercialize the product under a different trademark in oncology.  Using different trademarks helps to ensure that Nycomed’s product will be prescribed and purchased for non-cancer indications and Immunomedics’ products will be prescribed and purchased in the oncology field.

Ÿ         Dosage Forms.  Immunomedics expressly retained all rights with respect to IV formulations of veltuzumab based on the expectation that Nycomed’s product will be marketed in a subcutaneous formulation and Immunomedics’ product in the oncology field will be marketed in an IV formulation.  This difference in formulations should also help to limit off-label sales between the parties’ respective fields.  However, a subcutaneous formulation of veltuzumab may be desirable in the oncology field, as evidenced by an ongoing clinical trial of a subcutaneous formulation of rituximab for CLL.  Therefore, there is some risk for Immunomedics that hematologists and oncologists may prescribe Nycomed’s subcutaneous formulation of veltuzumab for their cancer patients instead of Immunomedics’ IV formulation.

Ÿ         Physicians.  The parties also split the clinical indications into two classes where there will likely be little overlap in terms of prescribing physicians.  Immunomedics’ product will be prescribed by hematologists and oncologists, whereas Nycomed’s product will be prescribed by rheumatologists and other physicians.

Immunomedics’ promotion right for ITP complicates the indication split

ITP (idiopathic thrombocytopenia) is treated by hematologists and oncologists, the same physician specialists who treat blood cancers within Immunomedics’ oncology field such as non-Hodgkins lymphoma and CLL.  While this structure will allow Immunomedics to leverage its oncology sales force, there may be some issues:

Ÿ         Two Trade Names for 1 drug.  If Nycomed is successful in developing veltuzumab for ITP and Immunomedics is successful in developing veltuzumab for an oncology indication such as non-Hodgkins lymphoma, Immunomedics’ sales representatives will be in the position of promoting the same drug substance to the same physicians under two different trade names: Nycomed’s trade name for ITP and Immunomedics’ trade name for oncology indications.

Ÿ         Two sets of Samples.  Immunomedics’ sales reps will need to leave samples of both products to the same physicians.

Ÿ         Two sets of Marketing Materials.  Immunomedics’ sales reps will presumably have to detail the product from two different sets of marketing materials and two different package inserts. 

Ÿ         Need to prevent Off-Label Promotion.  Immunomedics sales reps will need to be very careful to limit their promotion of the subcutaneous formulation of veltuzumab to ITP and the IV formulation to oncology indications.  As mentioned above, physicians may have a significant interest in treating cancer patients with a subcutaneous formulation of veltuzumab.  However, unless the parties agree to seek approval for a subcutaneous formulation in cancer indications, Immunomedics’ sales reps will not be permitted to discuss the use of the subcutaneous formulation beyond ITP and will need to forward all such inquiries on to the appropriate medical affairs or medical scientific liaison representatives.  Off-label promotion can result in tremendous liability for pharmaceutical companies, and the overlap between the two products within the same sales force and the same physician groups will require Immunomedics to be particularly vigilant in preventing off-label promotion.

Sole-Promotion Option.  The agreement requires Nycomed to develop veltuzumab for ITP at its own expense, and Immunomedics has the option to exclusively promote the product in the U.S. for ITP.  This structure is somewhat unique in that Nycomed is paying an up-front fee and paying to develop the product in ITP, while facing the possibility that Immunomedics will exercise its option to exclusively promote the product in that indication in the U.S.  The promotion profit split between the parties was not publicly disclosed, but presumably it is sufficiently attractive to Nycomed in order to justify the risk and expense in developing the product for ITP.  Otherwise, there would be a risk that the parties’ respective interests in advancing veltuzumab are not closely aligned.

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Client Opportunity of the Month – Zenobia Therapeutics

Zenobia Therapeutics (www.zenobiatherapeutics.com) is a great company that offers collaborations on protein crystallography and fragment-based lead discovery in CNS.  Fragment-based lead discovery is ideal for designing molecules that are small enough to readily cross the blood brain barrier.  Zenobia is making great progress finding inhibitors of LRRK2 for Parkinson’s disease, GSK3 beta for Alzheimer’s and ALK for neuroblastoma.    One of thing that makes Zenobia unique is the combination of their superb chemistry skills with rich biology insights of their academic collaborators for each target.  Zenobia is ready to work with you on your favorite CNS target in need of crystallization, structure determination and/or inhibitor discovery. 

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Pullan Consulting

Linda M. Pullan, Ph.D.

Biotech Business Development

www.pullanconsulting.com and www.lindapullan.com

e-mail: lpullan@msn.com

805-558-0361

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