Growing its global reach, Biovitrum AB entered a potential $150 million worldwide agreement with GlaxoSmithKline plc to develop Biovitrum's 5-HT2C receptor agonists to treat obesity, with the potential for more money if products are developed in other indications.

The most advanced product included in the collaboration, the appetite-suppressing compound BVT.933, has completed Phase IIa trials and is expected to enter Phase IIb at the beginning of next year. GlaxoSmithKline will pay Stockholm, Sweden-based Biovitrum an up-front fee and milestone payments related to progress, regulatory submissions and approvals.

"It is a fairly traditional deal, with no equity involved," Biovitrum CEO Mats Pettersson said. "There's a substantial part up front, and we have milestones lined up as the product develops. Naturally, the closer it gets to the market, the larger part of the milestones will be paid."

He said that in Phase IIa studies, patients treated with BVT.933 showed a significant reduction in weight relative to placebo. Specifically, the double-blind, placebo-controlled trial treated 154 obese but otherwise healthy patients with placebo or BVT.933 in two dose groups for four weeks. Patients in both BVT.933 groups achieved a statistically significant weight reduction.

Biovitrum will run the upcoming three-month dose-finding study in Scandinavia, although both companies will coordinate its development. GlaxoSmithKline then would fund and conduct further development, registration and manufacturing activities.

"The transfer of the product will take place during this time," Pettersson said. "Glaxo paid to get into the product as of today, but part of the work will be transferred during this clinical trial."

The deal follows a business plan laid out at Biovitrum after its August 2001 spin-off from Peapack, N.J.-based Pharmacia Corp. The plans calls for maximizing profits on a product it has brought into late-stage testing.

"We're talking about potential blockbuster products, so our own capabilities and capacity to sell these products is limited," Pettersson said. "We need big pharma partners. And we also know that big pharma is much more interested in negotiating good terms for a drug with a known proof of principal or proof of concept. That takes away a substantial part of the risk, and by knowing that, they're willing to pay a substantially higher fee."

In return, GlaxoSmithKline gains exclusive rights to develop, register, manufacture and commercialize Biovitrum's existing collection of 5-HT2C receptor agonist compounds. Pettersson said London-based GlaxoSmithKline's interest in other indications includes the central nervous system area, such as anxiety, depression and memory enhancement.

Additional milestone payments are payable for development of BVT.933 or other 5-HT2C receptor agonists for other indications, in addition to royalties on future sales of products.

"It depends a lot on what indication, but if you just take one more indication, we're talking about a ballpark [range] of $60 million to 70 million in further up-front payments," Pettersson said. "And then what we consider to be an interesting royalty rate."

Aside from BVT.933's ability to regulate appetites, Biovitrum's drug discovery activities focus on mechanisms related to energy consumption, lipid metabolism, blood glucose lowering and insulin sensitivity.

Biovitrum retains the exclusive right to commercialize products arising from the collaboration in the Nordic countries. Pettersson said his company's other programs, including proteins for therapeutics and oncology, could be fully developed and commercialized internally or follow similar development and transfer patterns.

Biovitrum, which also has programs for Type II diabetes, last month entered a drug discovery collaboration with Sittingbourne, UK-based BioFocus plc, focused on G protein-coupled receptors.

But the GlaxoSmithKline agreement, Biovitrum's first development deal with a large pharmaceutical firm, simply made sense.

"After we released the results of our Phase IIa study [for BVT.933] in early April, they emerged as the partner of choice," Pettersson said. "We know GlaxoSmithKline has therapeutic franchises in CNS as well as other indications, so in a way, they are a very good partner."