OSI Adds Liposomal Lurtotecan To Pipeline As Part Of Gilead Oncology Deal

The topoisomerase I inhibitor NX211 is the most advanced drug candidate OSI Pharmaceuticals will add through its acquisition of Gilead's oncology research program.

NX211, a liposomal formulation of lurtotecan, is in Phase II for the treatment of small cell lung cancer and relapsed ovarian cancer. The compound was outlicensed by Glaxo Wellcome in 1998.

OSI will purchase Gilead's oncology division for $130 mil. in cash and $40 mil. in OSI stock. Gilead will also receive up to $30 mil. in milestone payments related to the development of NX211.

The agreement includes two other clinical-stage compounds, the Phase I nucleoside analogue GS7836 and the liposomal thymidylate synthase inhibitor GS7904L, which is also in Phase I.

OSI will acquire Gilead's Boulder, Colo. oncology R&D site. Most of the facility's 146 employees there are expected to join OSI.

The Boulder site was the former research campus for NeXstar, which Gilead acquired in March 1999. NX211 was originally licensed by NeXstar from Glaxo in 1998.

Gilead obtained the liposomal formulation technology (and the rights to NX211) when it acquired NeXstar.

Gilead paid $500 mil. in stock for NeXstar. In addition to the Boulder research program, the acquisition gave Gilead a $100 mil. annual revenue stream from the liposomal formulations Ambisome and DaunoXome , as well as $55 mil. in cash (¹ (Also see "NeXstar Moves From Start-Up To Swallowed-Up: Gilead Is Buyer" - Pink Sheet, 8 Mar, 1999.), p. 21).

Gilead will retain both Ambisome (a systemic antifungal) and DaunoXome (a Kaposi's sarcoma therapy), which fit with its infectious disease marketing focus. Gilead markets Vistide for CMV retinitis in AIDS patients, Tamiflu for influenza and Viread for the treatment of HIV.

Gilead said it plans to use the cash from OSI to help fund the Viread (adefovir) launch. The product was approved by FDA at the end of October, and Gilead plans a supplemental filing for use in hepatitis B during the first half of 2002 (² (Also see "PEG-Intron Access Program Requires ID Number, Designed To Ensure Supply" - Pink Sheet, 5 Nov, 2001.), p. 21).

Gilead will also evaluate product or company acquisitions in the infectious disease area.

OSI described the three in-licensed compounds as a good complement to its existing oncology R&D focus. The Gilead projects are intended to be improved formulations of existing products, which is "the opposite of our discovery focus, which is on next-generation...approaches," OSI CEO Colin Goddard, PhD, said. "The challenge is differentiating these products from products which exist in the marketplace."

NX211 would compete against GlaxoSmithKline's Hycamtin (topotecan) and Pharmacia's Camptosar (irinotecan), Goddard noted. "We expect with the advantage of the liposomal formulation to show an improved therapeutic index and differentiation in terms of response rate and time to progression," he said.

GS7904L will compete against generic 5-FU. "One of the challenges has been giving long-term pharmacokinetic coverage at the target with the drug," VP-U.S. Research Neil Gibson said. "Here we see, I think, a real opportunity with the liposomal approach."

Gibson called GS7836 a "next-generation" gemcitabine (Lilly's Gemzar ). "In mechanism of action, in the way that this compound actually blocks the cell cycle, I think there you've got a differentiating agent that could win a head to head with gemcitabine," he maintained.

OSI's lead research project is the epidermal growth factor receptor tyrosine kinase inhibitor Tarceva (formerly OSI-774). The product, which is being developed with Genentech and Roche, is in Phase III and expected to launch in mid-2004.

Three execs from Gilead's oncology research program will be joining OSI: Gilead Senior VP-Medical Affairs Nicole Onetto, MD, will join OSI as exec VP-oncology; VP-Global Regulatory Affairs Robert Simon will become VP-regulatory affairs; and VP-Oncology Clinical Research Pedro Santabarbara, MD/PhD, will become VP-clinical research. All three are former Bristol-Myers Squibb execs.