Targanta Therapeutics Inc. added to its antibacterial pipeline by acquiring worldwide rights to the late-stage antibiotic oritavancin, the third product divested by InterMune Inc. this year in an effort to refocus its pipeline.

Terms of the agreement call for up-front and milestone payments totaling $9 million, plus a convertible promissory note worth up to $25 million in principal amount issued by Targanta that will be converted into preferred stock upon the achievement of certain corporate objectives. The deal also promises InterMune a seat on Targanta's board.

Oritavancin, a semi-synthetic glycopeptide antibiotic, initially was developed by Indianapolis-based Eli Lilly and Co. as a replacement for vancomycin. After completing one Phase III trial, Lilly licensed the drug to InterMune, which finished a second Phase III study, said Alex Moot, chairman of Targanta and general partner with investment firm Seaflower Ventures, of Waltham, Mass.

Targanta's chief science officer, Tom Parr, previously worked at Lilly Research Laboratories and was well acquainted with oritavancin, so "when it came available for licensing, we decided to pursue it," Moot told BioWorld Today.

It has been tested in more than 1,750 patients, demonstrating safety and efficacy in treating complicated skin and skin-structure infections, and it works using the same mechanism of action as vancomycin, "plus an additional mechanism that enables it to eradicate vancomycin-resistant pathogens," Moot said. "It's also active against Gram-positive pathogens, [methicillin-resistant S. aureus] infections and others, and is rapidly bactericidal."

Oritavancin also has been shown to eradicate those pathogens intracellularly, which could prevent the recurrence of infections following treatment, he added.

Since bacterial strains are prone to building up antibiotic resistance, there is a continuing need for new antibacterial products on the market. The Infectious Disease Society of America estimates that 2 million people acquire hospital-related infections each year, with 90,000 dying. Roughly 70 percent of those infections are resistant to at least one drug, and overall antibiotic resistance appears to be on the rise.

Targanta plans to file a new drug application for oritavancin, though the company must first complete an additional safety study relating to product manufacturing. That study is expected to finish around the end of 2006 or early 2007, Moot said.

"We're also bringing on board some former Lilly employees to assist with oritavancin development," he said.

The company also anticipates evaluating oritavancin in additional indications, such as nosocomial pneumonia, endocarditis and catheter-related bacteremia.

With the acquisition, oritavancin become the most advanced drug in Targanta's pipeline, which has a preclinical candidate for treating and preventing osteomyelitis and several early candidates in the advanced hit and characterization stage. The company's research revolves around a discovery platform that identifies molecular interactions that allow bacteriophages to attack the bacteria.

"All the drugs we're developing are for serious infections in the hospital," Moot said, adding that Targanta's aim is to take those products to the market itself.

"We'll explore our options further when we get there," he said. "But right now, we're planning to commercialize them ourselves."

Targanta, which started 2005 by changing its name from Phage Tech Inc., has raised about $20 million to date. The company is based in Indianapolis, with research and development operations in St. Laurent, Quebec.

Refocusing Continues At InterMune

The divestiture of oritavancin marks the third product Brisbane, Calif.-based InterMune has sold this year as part of a corporate strategy to narrow its pipeline to two therapeutic areas: pulmonology and hepatology.

In May, the company sold another anti-infective candidate, Amphotec, to Three Rivers Pharmaceuticals LLC, of Cranberry Township, Pa. Late last month, InterMune struck a $135.5 million deal to sell U.S. and Canadian rights for its hepatitis C compound, Infergen, to Costa Mesa, Calif.-based Valeant Pharmaceuticals International Inc. (See BioWorld Today, May 26, 2005, and Nov. 30, 2005.)

Those recent moves, along with the staff reduction of 160 employees last month, are aimed at ensuring enough capital to develop its pipeline without having to conduct another financing round or seeking partners.

The company anticipates starting a Phase III trial of pirfenidone during the first half of next year in patients with idiopathic pulmonary fibrosis. Also in the area of pulmonology, InterMune is evaluating Actimmune (interferon gamma-1b) in a Phase III study in IPF. InterMune previously received approval for Actimmune for infections associated with chronic granulomatous disease and for delaying time to progression in patients with severe, malignant osteopetrosis.

InterMune's hepatology pipeline includes a HCV protease inhibitor set to begin clinical trials next year, as well as several small-molecule programs at the research stage.

For the third quarter, InterMune posted a net loss of $23.8 million, or 74 cents per share. It had cash, cash equivalents and marketable securities of $120 million.

The company's shares (NASDAQ:ITMN) closed at $16.73 Tuesday, up 18 cents.