Medivir AB has opted to license rights to a compound for varicella zoster virus to Epiphany Biosciences, a company formed last year to focus on virology.

Under the terms, Medivir will receive equity in Epiphany and be eligible for up to $24.5 million in milestones, plus potential royalty payments. In exchange, Epiphany gains worldwide rights, with the exception of the Nordic countries, to MIV-606 (valomaciclovir), a Phase II-stage compound that has demonstrated efficacy in patients with shingles caused by the varicella zoster virus (VZV).

MIV-606 will become Epiphany's lead product, and "we think it's an excellent drug candidate," said Fred Volinsky, president and CEO of San Francisco-based Epiphany. "Medivir has some unique talents in this space."

Medivir, of Huddinge, Sweden, primarily is a research company, with most of its resources directed to discovery and development. The company recently moved one of its lead products, Lipsovir (ME-609), into a 2,000-patient Phase III trial in the prevention of labial herpes.

"But we have several other compounds in our pipeline," said Bo Oberg, board member and principal shareholder of Medivir, "so we have to get help from people both financially and scientifically to bring some of our products to the market."

Epiphany has a "very strong group of people" to further develop MIV-606, he added.

Volinsky, who founded Epiphany about a year ago with Robert Gallo, David Myles and Barry Selick, said his interest in VZV stems from his earlier work as a clinician at Massachusetts General Hospital.

While there hasn't been much development in the VZV space - largely due to the development and approval of Zostavas, a vaccine marketed by Whitehouse Station, N.J.-based Merck & Co. Inc., "we still see a very big market opportunity for a zoster drug," Volinsky said, "especially one with improved criteria."

VZV cases are expected to become more prevalent for the baby boomer generation, which is "entering the age where the risk of zoster increases," he said.

"On top of that," he added, "some virologists believe that the predisposition for shingles is going to increase" because of the advent of pediatric vaccination programs.

In the past, people who got chickenpox as children would continue to be exposed to the virus throughout their lifetimes. But, for many, their children and grandchildren have been vaccinated and that lack of continued exposure puts many at risk for shingles later in life.

In addition to VZV, MIV-606 has suggested effective inhibition of other herpesviruses that could be implicated in a number of diseases and chronic conditions, which makes it a perfect addition to Epiphany's portfolio.

"We're particularly interested in the relationship between viruses and systemic disease," Volinsky told BioWorld Today. "We feel like it's an area that's been underfunded, both commercially, as well as in terms of research."

That's why, in addition to the compound licensed from Medivir, the company is working on programs to target hepatitis C virus and avian flu, as well as exploring viral links to other diseases, such as the "potential viral ideology in multiple sclerosis," Volinsky said.

To date, the start-up firm has remained fairly guarded about its activities, though Volinsky said early efforts brought in some promising drug discovery platforms and put together "a pretty elite team of virologists."

He added that it also secured "several million in seed funding" from Boca Raton, Fla.-based Windsor Bay Capital and is raising its Series A round.