MethylGene, Pharmion announce licensing agreement for oncology HDAC inhibitors

By Lisa Kerner

Erie, Pa., Jan. 30 - MethylGene Inc. and Pharmion Corp. announced a license and collaboration agreement for the research, development and commercialization of MethylGene's histone deacetylase (HDAC) inhibitors in North America, Europe, Middle East and certain other markets.

This collaboration includes MGCD0103, MethylGene's lead HDAC inhibitor, as well as the company's pipeline of second generation HDAC inhibitor compounds for oncology indications, according to a company news release.

HDAC inhibitors are a new class of compounds that inhibit histone deacetylation, a process that regulates gene expression. MGCD0103 is an oral compound currently in multiple phase 1 clinical trials in solid tumors and hematological malignancies.

Under the terms of the agreement, MethylGene will receive from Pharmion up front payments totaling $25 million, consisting of a $20 million license fee and a $5 million equity investment in MethylGene common shares.

Pharmion's milestone payments to MethylGene for MGCD0103 could reach $145 million, based on the achievement of significant development, regulatory and sales goals, with the nearest-term milestone of $4 million to be paid upon enrollment of the first patient in a phase 2 trial. Up to $100 million for each additional HDAC inhibitor may be paid, also based on the achievement of significant development, regulatory and sales milestones.

Pharmion will provide one year of research support ($2 million) for a team of eight MethylGene scientists dedicated to identifying second generation clinical candidates in addition to MGCD0103.

MethylGene will initially fund 40%, and Pharmion 60%, of the preclinical and clinical development for MGCD0103. MethylGene will receive royalties on net sales in North America ranging from 13% to 21%.

In all other licensed territories, which include Europe, the Middle East, Turkey, Australia, New Zealand, South Africa and certain countries in Southeast Asia, Pharmion is responsible for development and commercialization costs and MethylGene will receive a royalty rate of 10% to 13% based on annual net sales.

MethylGene previously executed an agreement for MGCD0103 (and its second generation oncology HDAC inhibitors) with Taiho Pharmaceutical Co., Ltd. for Japan, Korea, Taiwan and China.

A Global Development Committee will be formed among Pharmion, MethylGene and Taiho to share data and coordinate the development program on a global scale.

As a single agent therapy, MGCD0103 has completed one phase 1 clinical trial with daily dosing in solid tumors and a second phase 1 trial is underway in solid tumors on a three times per week schedule. Two phase 1 clinical trials are ongoing in hematological cancers, one administered three times per week and the second twice per week. A phase 1/2 combination trial with DNA methylation inhibitor Vidaza was initiated in November 2005 and enrollment is under way at major cancer centers in the United States. Additional combination phase 1/2 and monotherapy phase 2 trials are expected to begin in 2006.

"We believe this collaboration, potentially worth $272 million including upfront, research and development milestone payments, further validates the value of MethylGene's promising pipeline and our partnering strategy," Donald F. Corcoran, president and chief executive officer of MethylGene, said in the release. "In addition, we believe that this collaboration will allow us to carry out our research and development activities into the first quarter of 2008."

MethylGene is a publicly traded biopharmaceutical company focused on the development and commercialization of novel therapeutics in cancer and infectious diseases. The company is based in Montreal, Ont.

Pharmion is a pharmaceutical company focused on acquiring, developing and commercializing innovative products for the treatment of hematology and oncology patients. The company has its headquarters in Boulder, Colo.

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