Switzerland's Basilea licensed its Phase III anti-fungal isavuconazole to Japan's Astellas Pharma Feb. 24, just days after Johnson & Johnson revealed it was pulling out of its five-year deal with the biotech on the delayed antibiotic ceftobiprole.

The new partner provides CHF75 million ($69.4 million) in upfront cash and up to CHF 478 million in development and sales milestones, plus double-digit tiered sales royalties. Astellas will lead development and commercialization of the drug, but Basilea retains an option to co-promote it in the U.S, Canada, major European countries and China.

During the next six months, Astellas also may negotiate rights to isavuconazole in Japan, where it would require a separate clinical development plan.

The tie-up boosts Basilea's cash and balance sheet and helps validate the biotech's pipeline. Such validation is particularly welcome after the uncertainty created by the company's divorce with J&J the day after Europe's drug advisory committee, the CHMP, recommended against ceftobiprole's approval.

The two companies remain in arbitration over who is responsible for delays to ceftobiprole's clearance by U.S and EU regulators, which were caused by poor trial data. During a year-long transition period, J&J retains control of the drug's development, including further trials requested by FDA (and likely to be requested in the EU too) (Also see "J&J and Basilea End Ceftobiprole Deal" - Pink Sheet, 22 February, 2010.).

Most analysts saw the J&J hand-back as positive overall for Basilea, but had concerns about the impact on its cash runway, given its late-stage development programs (most significantly isavuconazole, which was eating up about 80 percent of R&D spend) and marketing commitments for the chronic hand eczema drug Toctino (alitretinoin), which it currently sells in four European markets.

The Astellas deal washes away those concerns, in part since the Japanese group will lead - and hence fund most of - isavuconazole's further development as a treatment for patients with invasive fungal infections caused by Aspergillus or other mold or yeast infections.

As such, "it's a major positive," writes Richard Parkes, senior analysts at Piper Jaffray in London in a same-day note. "It frees up resources to invest in the launch of Toctino [which is approved in an additional eight markets and is in Phase III trials in the U.S.] and significantly strengthens the company's balance sheet."

"We would expect that this partnership should significantly reduce the company's burn rate in R&D and, therefore, secure its financing well into 2012, when we expect the company to break even," said Helvea analyst Olav Zilian.

Basilea will still participate in the anti-fungal's development - that was a condition of the deal, according to management - although Astellas will likely have ultimate control. The biotech will initially manage manufacturing.

In response to questioning during Basilia's conference call on the deal, CEO Anthony Man also pointed out that the biotech would "absolutely" be attending regulatory meetings with its partner and plans on a "very close relationship" - an implicit reference to lessons learned from the biotech's rocky relationship with J&J. In sum, participation in the compound's development and eventual submission will be a priority for Basilea this time around.

Isavuconazole - available either orally or by IV infusion - will be positioned as a best-in-class drug for life-threatening invasive fungal infections, to which immune-compromised patients (such as cancer or transplant patients) are particularly prone. Data thus far shows high oral bioavailability and few drug-drug interactions. The orally-administered drug will ideally complement Astellas' candida therapy Mycamine as a "step-down" treatment that patients can take outside hospital.

The partners aim to re-start patient recruitment into Phase III isavuconazole trials (of which there are three major ones) during the first half of 2010, following the resolution of a batch supply issue which put recruitment on hold in early 2009. Future indications for the drug may include prophylaxis.

The Astellas tie-up also means Basilea can more quickly progress its pre-clinical assets, including a gram-negative anti-bacterial and a microtubule destabilizer in late-preclinical. "We have had to watch our finances carefully throughout this period," Chief Financial Officer Ronald Scott explained on the conference call. "We'll continue to do that, but are now able to bring our late-stage pre-clinical compounds more quickly into the clinic."

Commercial Infrastructure: Leveraging Astellas', Building Basilea's

Meanwhile, the co-promotion options should help accelerate the biotech's plans to build a commercial infrastructure in specialist anti-infectives, leveraging its existing Toctino sales force. Such an infrastructure would also allow Basilea to participate in ceftobiprole's eventual commercialization; despite its rocky path to date, this drug remains a "valuable asset," according to Piper Jaffray's Parkes.

Basilea has a commercial organization in the Nordic countries, France, Germany, the U.K., Switzerland and Canada. It will build up (or appoint a distributor) in other markets pending national approval and reimbursement decisions for Toctino.

Astellas' credentials as a marketer of anti-infectives are well-established, helping it win rights to late-stage assets from among a number of interested parties. The group markets the anti-fungal Mycamine (micafungin) worldwide, and counts oral quinolone Geninax (garenoxacin) and oral cephalosporin Cefzon (cefdinir) among its top products in Japan. In the U.S., Astellas sells systemic anti-fungal AmBisome (amphotericin B).

As such, Basilea's management is confident that isavuconazole will grow into being a larger drug if placed within Astellas' portfolio, thanks to its fit and the Big Pharma's existing commitment to the area, than it would if they sold it alone.

Astellas has also significantly stepped up its deal-making, particularly during 2009, and is now among the most international - as well as the largest - of the Japanese-based drug firms. In October 2009, the group also saw off considerable competition for U.S. co-promotion and exclusive rights outside the U.S. to Medivation's prostate cancer drug, forking out $100 million up front for the asset (Also see "Medivation Gets $110M Upfront From Astellas In Prostate Cancer Collaboration" - Pink Sheet, 27 October, 2009.).

Basilea's shares are up almost 15 percent since J&J's withdrawal.

-Melanie Senior (m.senior@elsevier.com)

Basilea Recovers With Astellas Deal For Phase III Anti-Fungal Following J&J Break-Up

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