BioWorld International Correspondent

Active Biotech AB needed a partner for its oral multiple sclerosis drug, laquinimod, and found one with multiple sclerosis experience in Teva Pharmaceutical Industries Ltd., as they formed a deal that could earn Active Biotech up to $92 million in up-front and milestone payments, as well as double-digit royalties that would increase with sales growth.

Active Biotech, of Lund, Sweden, retains marketing rights for the four Nordic countries, plus the three Baltic states of Lithuania, Latvia and Estonia. The region represents a total MS market worth about $90 million annually, said Active Biotech President and CEO Sven Andréasson.

Active Biotech is getting $5 million up front, with an additional $87 million available in milestones, depending on the progress of the clinical development program.

"What we really wanted to accomplish was a high upside in potential royalties, and we really wanted a partner to invest in a clinical program," Andréasson told BioWorld International. Laquinimod already has completed a Phase II trial, and results were reported at the American Academy of Neurology meeting in San Francisco in April. It is undergoing an open-label Phase IIa trial to determine its efficacy and tolerability at high doses.

Laquinimod, which acts via an undetermined immunomodulatory mechanism, is a successor to an earlier MS drug candidate, linomide (roquinimex), which failed in a Phase III trial in 1997, due to myocardial infarction and several fatalities. Active Biotech inherited the program from Pharmacia (now part of New York-based Pfizer Inc.) and conducted a screening program for safer and more active alternatives.

Teva, of Jerusalem, will have responsibility for all future development of laquinimod. It previously brought to market Copaxone (glatiramer acetate), the only non-interferon therapy in widespread use for treating MS.

"We see what Teva has accomplished in the MS business and we are very impressed," Andréasson said. "They have a very good track record in clinical development and commercial performance."

The deal gives Teva a second shot at developing the first oral MS drug. It has an existing alliance with H. Lundbeck A/S, of Copenhagen, Denmark, to develop an oral formulation of Copaxone, although that program failed to yield statistically significant results in a Phase III trial. However, the program continues, a company spokeswoman said.

Investor response in Stockholm, Sweden, was cool. Although Active Biotech's stock hit a peak of SEK63 (US$8.31) Monday on the Stockholm Stock Exchange, up from Friday's close of SEK54.50, it ended the day at SEK56.

"I think the Swedish market has a tendency to look for high up-front [payments]," Andréasson said. "I think the information has to sink in a bit, and people have to become more acquainted with Teva and their capabilities."