In a move to expand its branded product offering, generic player Teva Pharmaceutical Industries Ltd. (TEVA) recently entered into a global license and collaboration agreement with OncoGenex Pharmaceuticals, Inc. (OGXI). Teva and OncoGenex are collaborating for the development and commercialization of OncoGenex’ late stage pipeline candidate OGX-011 which is being studied for the treatment of different types of cancer.
OGX-011 has been co-discovered with Isis Pharmaceuticals (ISIS) to inhibit cancer treatment resistance. The candidate is being developed for use as adjunct therapy to increase the effectiveness of chemotherapy. OGX-011 has completed phase II studies in prostate and lung cancer and is scheduled to enter into two phase III studies in 2010.
While one study will be conducted to evaluate the candidate as second-line chemotherapy in men with metastatic castrate resistant prostate cancer (CRPC), the second study will evaluate the candidate as first-line chemotherapy for metastatic CRPC. A third phase III study for the first-line treatment of advanced, unresectable non-small cell lung cancer (NSCLC) will commence by early 2011.
Teva will make an initial cash payment of $60 million to OncoGenex. This includes a $10 million equity investment in OncoGenex common stock, an upfront payment of $20 million and prepayment of $30 million for OncoGenex’ contribution to the development costs of OGX-011. Teva will also pay up to $370 million on the achievement of development and commercial milestones. Additionally, Teva will pay tiered royalties in the mid-teens to mid-twenties range on product sales. While Teva will be responsible for all commercialization and development expenses, OncoGenex has retained the option to co-promote OGX-011 in the U.S. and Canada.
We view this deal as a step in the right direction for Teva. The successful development of OGX-011 should not only help Teva strengthen its cancer product portfolio, it should also help boost its top-line given the demand for new treatment options for cancer.
The National Cancer Institute estimates that approximately 192,280 new cases of prostate cancer will be diagnosed in the U.S. in 2009. Meanwhile, lung cancer remains responsible for the most cancer-related deaths in men and women, representing 28% of all cancer-related deaths. According to the National Cancer Institute, about 219,440 new cases of lung cancer will be diagnosed in the U.S. in 2009. Non-small cell lung cancer accounts for approximately 85% of all lung cancer cases.
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