Bayer and Regeneron Pharmaceuticals will co-develop a vascular endothelial growth factor trap for eye diseases and disorders including wet age-related macular degeneration and diabetic macular edema under a collaboration agreement announced Oct. 18.

The companies will jointly commercialize the VEGF Trap-Eye outside the U.S and will share equally in ex-U.S. profits. Tarrytown, N.Y.-based Regeneron retains exclusive commercialization rights to all indications in the U.S.

"The VEGF Trap is an excellent strategic fit for Bayer, which underscores our commitment to specialty pharmaceuticals," Bayer HealthCare Chairman Arthur Higgins said.

"We are encouraged by the early clinical data we've seen and believe the VEGF Trap has the potential to further transform the treatment paradigm for patients suffering from diseases of the eye."

The VEGF Trap-Eye is a protein that binds to or "traps" VEGF and blocks its activity, according to Bayer. The product is currently in Phase II trials for wet AMD and Phase I for DME.

If the VEGF-Trap Eye is eventually cleared for wet AMD, it will face stiff competition from Genentech's recently launched VEGF inhibitor Lucentis (ranibizumab).

Approved in June, Lucentis generated $153 mil. in its first full quarter on the market, and the product quickly took market share from competitors such as Pfizer/OSI's VEGF inhibitor Macugen (pegaptanib) and Novartis/QLT's photodynamic therapy Visudyne (verteporfin) (¹ Also see "Lucentis’ First Patients Mostly Taken From Macugen, Visudyne & Avastin – Genentech" - Pink Sheet, 12 October, 2006.).

Terms of the agreement include an up-front payment of $75 mil. to Regeneron. The companies will share initial global development costs, which will amount to over $250 mil. in the next several years. From 2007-2008, expenses will be divided "according to a formula based on total development costs"; from 2009 forward, all expenses will be shared equally.

"If a VEGF Trap-Eye product is granted marketing authorization in a major market country outside the U.S., Regeneron, from its 50% share of VEGF Trap-Eye profits outside the U.S., will reimburse Bayer for 50% of the development costs that Bayer has incurred," the firms noted.

The deal also includes up to $110 mil. in potential total development and regulatory milestones related to the development of the VEGF Trap-Eye for wet AMD and DME and subsequent approvals. A total of $40 mil. of those payments are due upon the initiation of Phase III clinical trials in wet AMD and DME.

Regeneron could earn $135 mil. in sales milestones "when total annual sales of the VEGF Trap-Eye outside the U.S. achieve certain specified levels starting at $200 mil.," Bayer adds.

Bayer has shown a willingness to sign major biotech deals this year without insisting on rights to the U.S. market. In January, Bayer inked a deal worth up to $385 mil. with Bay Area biotech Nuvelo for ex-U.S. rights to Phase III thrombolytic alfimeprase.

- Brooke McManus (b.mcmanus@elsevier.com)

Bayer Nails Down Deal To Share Ex-U.S. Rights For Wet AMD Treatment

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