Washington Editor

Tolerx Inc. has entered into a deal with GlaxoSmithKline plc that could be worth more than $760 million to develop and commercialize the biotech's lead product otelixizumab (TRX4).

The product is a humanized anti-CD3 monoclonal antibody that has been evaluated in Type I diabetes in two Phase II clinical studies and in psoriasis in two Phase I clinical trials.

The deal is the second in the past week that has involved a biotech hooking up with a large pharmaceutical firm for an anti-CD3 monoclonal antibody. Last week Rockville, Md.-based MacroGenics Inc. announced a deal with Indianapolis-based Eli Lilly and Co. worth up to $1 billion to develop and commercialize teplizumab to treat Type I diabetes. (See BioWorld Today, Oct. 19, 2007.)

"This is a competitive and dynamic process between us and our competitors," said Tolerx CEO Douglas J. Ringler.

Tolerx, Ringer told BioWorld Today, is "comfortable" with its position in the development timeline for otelixizumab and "in the intellectual property front."

Otelixizumab, he maintained, is the only anti-CD3 product that has been dose-optimized and evaluated in a randomized, double-blind, placebo-controlled Phase II trial in patients with new-onset Type I diabetes.

"It's a testament to the product's ability to show efficacy, which we intend to show and hope to show in a Phase III trial," Ringler said.

Otelixizumab is designed to block the function of autoreactive T-effector cells that attack the body's tissues and cause autoimmune disease while inducing a subset of T cells called T-regulatory cells that are thought to protect against T-effector cell damage well after the drug has been eliminated from the body.

In clinical trials, otelixizumab has been shown to preserve the function of insulin-producing beta cells in the pancreas in patients with Type I diabetes, reducing the amount of administered insulin needed to control blood-glucose levels.

Under the GSK deal, Cambridge, Mass.-based Tolerx has the option to co-promote otelixizumab in Type I diabetes in the U.S. with the London-based pharmaceutical giant, while GSK has the exclusive rights to develop and commercialize the antibody in all other indications worldwide. GSK also has the exclusive right to develop the pediatric indication for Type I diabetes in the U.S.

The agreement calls for Tolerx to receive an up-front payment, equity and advance R&D funding totaling $70 million. The biotech may receive up to $155 million in future development costs of otelixizumab in Type I diabetes. If otelixizumab makes it to market, Tolerx may bank up to $350 million in milestone payments.

The Massachusetts biotech may also receive up to $175 million in sales milestone payments based on tiered net sales thresholds of otelixizumab.

In addition, Tolerx will be entitled to receive tiered, double-digit royalty payments on worldwide sales of otelixizumab in all indications.

Ringler noted that his firm will receive higher royalties on net sales of the product in Type I diabetes.

Under the deal, GSK will invest up to $10 million in Tolerx's common stock at the time of the biotech's initial public offering.

Tolerx, which recently changed its name from TolerRx, will be responsible for otelixizumab's Phase III clinical trial program for Type I diabetes in the U.S. and submitting the biologics license application to the FDA.

"This is a transforming deal for Tolerx," Ringler said. "It provides funding for otelixizumab through Phase III and to registration. Therefore, the company is well-capitalized to be able to execute on its plan, which is to move otelixizumab to be first in market in new onset Type I diabetes."

Tolerx chose GSK to partner for otelixizumab, he said, because of the strength of the pharmaceutical firm's clinical and commercial capabilities and its shared commitment and vision and sense of urgency for the antibody's development and commercialization program.

While the economic terms of the deal were important, Ringler said, finding a firm that was a good cultural fit with Tolerx was imperative for the collaboration. GKS, he declared, met that criterion.

"We respect bilaterally each other, and we have worked well together with the GSK team and, quite frankly, we are very excited about a continued working relationship with them," Ringler said.

Tolerx's clinical development pipeline includes TRX1, a humanized anti-CD4 antibody that is being studied in multiple indications. Tolerx is collaborating with South San Francisco-based Genentech Inc. to develop and commercialize TRX1.

Tolerx also is in preclinical development of product candidates that induce immunological tolerance for the treatment of autoimmune diseases and circumvent tolerance for the treatment of cancer or chronic viral diseases.