BioWorld International Correspondent

Medivir AB took another step toward its goal of divesting its polymerase inhibitor assets before year-end by entering a pact with Bristol-Myers Squibb Co. to develop and commercialize its preclinical HIV drug candidate, MIV-170.

Medivir, of Huddinge, Sweden, is receiving an up-front payment of $7.5 million and would gain about $97.5 million in development and regulatory milestones, plus double-digit royalties on eventual product sales. Moreover, the company has also retained Nordic rights to the compound, a non-nucleoside reverse transcriptase inhibitor (NNRTI).

The news pushed the company's stock to two successive 12-months highs of SEK63 (US$8.70) and SEK65.50 last Wednesday and Thursday, respectively.

The deal is part of a wider company strategy to exit the polymerase inhibition area, for long its principal focus, and to concentrate its drug discovery efforts on protease inhibition instead.

"We just haven't got enough resources to concentrate on development of all our projects at the same time," Medivir CEO Lars Adlersson told BioWorld International.

The company had transferred six such drug candidates into a new entity, Medivir HIV Franchise AB, with the aim of out-licensing or selling them off by the end of the year. Three remain on the auction block, MIV-160, MIV-310 and MIV-410.

"There are active discussions ongoing," he said.

The portfolio includes a Phase II shingles treatment, MIV-606 (valomaciclovir), which the company out-licensed to San Francisco-based Epiphany Biosciences earlier this month in a deal worth up to $24 million.

In June, Medivir out-licensed MIV-210, a nucleoside analogue reverse transcriptase inhibitor (NRTI) that has undergone a Phase IIa trial in HIV, to Tibotec Pharmaceuticals Ltd., a subsidiary of Johnson & Johnson, of New Brunswick, N.J., in a deal worth up to $30 million. (See BioWorld International, July 6, 2006.)

The remaining assets are not expected to yield a deal as significant as the BMS agreement. MIV-170 was seen as "the most valuable asset in that portfolio," Peter Ostling, analyst at Stockholm, Sweden-based ABG Sundal Collier AB, told BioWorld International.

Focusing on protease inhibition will "broaden the company's therapeutic scope" he said, a theme which is playing well with investors. A protease inhibitor directed at hepatitis C virus, which the company has out-licensed to Tibotec, as well, is expected to enter the clinic before 2007.

Ostling said it may be superior to VX-950, which Cambridge, Mass.-based Vertex Pharmaceuticals Inc. also out-licensed to Johnson & Johnson. "It's more potent. The barrier for resistance is much higher for the compound," he said.

Medivir's lead product, Lipsovir, a proprietary formulation of the antiviral drug acyclovir and the steroid cortisone, recently entered a pivotal trial for prevention of cold sores arising from herpes simplex virus infection. The company aims to complete the study by the fall of next year and hopes to launch the product by late 2008. The existing market for cold sore treatments is worth close to $400 million in the U.S., Adlersson said, yet only a small fraction of episodes actually are treated.

ABG Sundal Collier has a buy recommendation on the stock at present, with a six-month price target of SEK110, Ostling said.