[Ip-health] R&D and sales costs for pipeline drug in Phase II trials

[Mike Palmedo]

The news story is about a pipeline drug for organ transplant patients
being developed Isotechnika and Roche.  Three figures cited in the
story:

- it took $20 million to take the drug to Phase II clinical trials
- it is estimated to take another $205 million to get through Phase III
- potential sales for the drug are estimated at $2 billion annually

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http://www.canada.com/edmonton/news/story.asp?id={99195DD7-F59C-46B5-A3F2-D062339C51A6}

Global drug firm likes what it sees
Edmonton biotech researchers get deal with Swiss giant
  
Paul Marck, Journal Business Writer  
Edmonton Journal 

Wednesday, April 10, 2002

Isotechnika Inc. is signing a $215-million US drug development deal with
Swiss pharmaceutical giant Roche, the biggest contract in Canadian
history between a biotech company with a global drug firm.

The deal involves Isotechnika's experimental ISA(tx)247, an
immunosuppressive drug used to treat organ transplant patients and those
with a host of immune diseases such as psoriasis and rheumatoid
arthritis.

Worldwide market potential for the drug is estimated at $2 billion US.
Last year, Novartis generated $1.2 billion in sales of cyclosporine.

"It does validate that some big things can happen in this city with the
intellectual and scientific talent we have here," said Economic
Development Edmonton president Allan Scott. "I think it will raise the
profile of the whole biotech and life sciences sector here in Edmonton."

Analysts say the deal is a fantastic one for the tiny Edmonton company,
given that the drug is still in development, needs a minimum of four
years to commercialize and requires regulatory approval and global
clinical trials.

"We believe in ISA(tx)247 we have found a compound that has blockbuster
potential," said Dennis Burns, vice-president and head of global
business development for Hoffmann-La Roche Ltd.

Isotechnika will stay put.

"As long as Bob and I are at the helm of this company, it will stay in
Edmonton," said president and chief operating officer Randy Yatscoff.
Robert Foster is chairman and CEO. 

Roche has 63,717 employees worldwide and annual revenue of approximately
$29 billion Cdn. Isotechnika has 60 employees. Itlost $11.8 million last
year.

The agreement represents the pinnacle in Isotechnika's nine-year
history. 

"There's no question this really gets us up and going and lends a lot of
credibility to get to market," Foster said. 

While a complex formulation, ISA(tx)247 is a derivative of
anti-rejection drug cyclosporine that has been manipulated and
molecularly altered in the lab.

The difference is that cyclosporine has toxic side effects including
premature wear on the kidneys to the point that long-term transplant
patients using it often require lifelong dialysis.

ISA(tx)247 has been shown to be more potent in inhibiting organ
rejection, but without the side effects.

Dr. Hari Kumar, Roche's transplant drug specialist, said Isotechnika's
discovery holds great promise. "This is innovative medicine that we're
bringing to the table."

Terms of the agreement include:

- Roche making up-front and milestone payments to Isotechnika, which, if
all development terms are met, will amount to $215 million US;

- Roche will pay Isotechnika a percentage of gross profits, or
royalties;

- Roche contributes 70 per cent of development costs of the drug and
Isotechnika 30 per cent;

- Roche gains exclusive world-wide marketing rights to ISA(tx)247);

- Roche takes an unspecified equity stake in Isotechnika;

Analysts like the deal. Shared control of the drug's development and
Roche's taking on the lion's share of costs going forward are
practically unheard of, said David Wingnean of TD Newcrest. It has
already cost Isotechnika $20 million to take ISA(tx)247 to Phase 2
clinical trials, showing favourable interim results.

Wingnean estimates it will take another $205 million -- of which
Isotechnika will pay $61.5 million -- to take ISA(tx)247 through the
necessary Phase 3 clinical trials worldwide.

ISOTECHNIKA SNAPSHOT

- 1993: Pharmacologist Robert Foster founds Isotechnika.

Its name derives from isotopes used in medical research. 

- 1993-95: Initial products based on proprietary research were
self-administered diagnostic breath tests for such maladies as ulcers
and fat malabsorption.

- 1995-97: Conducts research into anti-cancer drugs, hypertension drugs,
immunology.

- 1997: Discovers ISA(tx)247, a drug to replace cyclosporine. A total of
22 independent tests prove it to be 500 times more potent than
cyclosporine without significant toxic side effects.

- 1998: Isotechnika goes public on the Alberta Stock Exchange,
graduating to a listing on the Toronto Stock Exchange in 2000.

- 2001: U.S. Food and Drug Administration and Health Canada approve
Phase 1 one clinical trials of ISA(tx)247 for kidney transplant
patients. Health Canada also approves Phase 2 trials for rheumatoid
arthritis and psoriasis patients.

- March 20, 2002: Signs Roche to an exclusive, 45-day option to examine
ISA(tx)247 for $5-million US fee, including small equity stake.

- April 8: Signs $215-million US global drug development deal with Roche
for ISA(tx)247.