BioWorld International Correspondent

DeveloGen AG is selling off its lead program, the Phase III-stage Type 1 diabetes therapy DiaPep277, to Andromeda, a newly formed vehicle established by Ramat Gan-based Clal Biotechnology Industries Ltd., Israel's largest biotechnology investment firm.

Financial details were not disclosed, but Goettingen, Germany-based DeveloGen will receive regulatory and commercial milestones as well as royalties on eventual sales.

"There's a local aspect to the whole thing. DiaPep is very much an Israeli product," Chief Financial Officer Carsten Dehning told BioWorld International. DeveloGen gained ownership of DiaPep277 in 2004 when it completed a stock-based merger with Rehovot, Israel-based Peptor Ltd. (See BioWorld International May 19, 2004.).

The compound, a peptide fragment derived from Heat-Shock Protein 60 (HSP60), was developed by Irun Cohen, professor of immunology at the Weizmann Institute, also in Rehovot. It is thought to reduce the autoimmune destruction of insulin-producing beta cells in the pancreas by switching the cytokine profile of regulatory T cells from being pro-inflammatory to anti-inflammatory. Another recent study indicated that it also may act on innate T-cell receptors via Toll-like receptor 2 (TLR-2).

Recruitment for a Phase III trial has begun in Europe, South Africa and Israeli in 2005 and is due to be completed in 2009. Andromeda now will take on responsibility for the program, although DeveloGen will support its efforts while it builds up a team, Dehning said.

The disposal of DiaPep277 is part of a wider process of restructuring and refocusing within DeveloGen. "We have reduced the number of employees quite dramatically from last year," Dehning said. The company had 65 full-time equivalents (FTEs) then. Once the Andromeda deal has been completed, the company will have between 25 and 30 FTEs on the payroll and, he said, it intends to raise new funding on the basis of its profile as an early stage company with "three interesting and valuable" preclinical programs.

Those include somatropin, a somatostatin analogue in development for treating diabetic retinopathy and acromegaly, which also was part of the Peptor acquisition. The compound, which inhibits secretion of human growth hormone, is due to enter the clinic later this year. Further back are two in-house discoveries, an insulin sensitizer in development for Type II diabetes and a beta cell regeneration factor in development for Type I and Type II diabetes.