SAN DIEGO—In a deal worth potentially just over a half-billion dollars, SGX Pharmaceuticals is embarking on a license and collaboration agreement with Novartis that focuses on the development and commercialization of BCR-ABL inhibitors for the treatment of drug resistant chronic myelogenous leukemia (CML).
Under the terms of the agreement, SGX will receive from Novartis $25 million in up-front payments and the purchase of SGX common stock. The deal also includes a minimum of two years of research funding, at $4.5 million per year, with options to extend the research to a third and potentially a fourth year.
Added to payments granted on achievement of various success-based milestones, SGX could earn more than $515 million from the deal. And that's still not the entire story, notes Mike Grey, president and CEO of SGX, since his company would also stand to gain substantial royalties should the BCR-ABL inhibitors reach the commercial market.
So what does SGX bring to the table that is so valuable to Novartis?
As Grey notes, the drug imatinib, marketed as Gleevec, was the first targeted therapy in Philadelphia-Positive CML proven to inhibit BCR-ABL. The problem, he says, is that a subset of patients develops resistance to Gleevec or cannot tolerate therapy, and for those patients there are currently no other approved treatment options.
"Roughly 5 percent don't respond at all, and another 3 to 4 percent develop resistance each year, so there is a growing challenge to Gleevec's effectiveness over time," Grey explains. "Novartis and also Bristol-Myers Squibb have second-generation drugs in this realm in development, and they do address many of the mutants that develop under Gleevec resistance, but not all of them."
Drug candidates from SGX's lead series, on the other hand, which were developed from its Fragments of Active Structures (FAST) drug discovery platform, have exhibited activity against wild-type and drug resistant BCR-ABL mutants, including the most challenging mutant: T315I.
"The breakthrough that SGX made was to identify not just one but a series of compounds that inhibit the most significant Gleevec-resistant mutants, including T315I, which eluded other discovery efforts in the past," Grey says.
"We believe that a BCR-ABL inhibitor developed through this collaboration could have the potential to be used both as a monotherapy in second-line treatment of refractory or relapsed CML, and in combination with Gleevec or another agent in first-line treatment of CML," says Dr. Stephen Burley, CSO at SGX Pharmaceuticals.
SGX will be responsible for completing preclinical development of the lead candidate and submitting an investigational new drug application with the FDA. SGX will also be responsible for the completion of an initial Phase I clinical study, after which time Novartis will be responsible for conducting further clinical development and commercialization of the compound.
In addition to the upfront and milestone payments, SGX will receive royalty payments upon successful commercialization of products developed under the collaboration. SGX retains an option to co-commercialize oncology products developed under the agreement, for the U.S. market specifically. SGX reports that if that option is exercised, it would enable SGX to establish a stronger commercial presence in the North American hematology markets that the company plans to establish should it successfully navigate Phase II/III clinical trials and market its drug Troxatyl in the second half of 2007 as currently planned.
The initial development program that SGX is undertaking in the Novartis collaboration will look at relapse and refractory CML patients. The second prong of SGX's work, though, will focus on identifying up front those patients who are likely to have a higher risk of developing a resistance to Gleevec—which could be as high as 40 percent of the people with CML who would use the drug.
"There is a growing interest in the community in terms of treating these high-risk patients more aggressively to prevent resistance emerging rather than trying to solve the problem after it occurs," Grey says. "We see our BCR-ABL inhibitors potentially being part of combination therapy to achieve that. There are some parallels here with HIV infection, where you see a tremendous impact of combination therapy in terms of managing the disease chronically over a long period of time."