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By Donna Young

Washington Editor

MacroGenics Inc. has entered into a deal with Eli Lilly and Co. that could be worth more than $1 billion to develop and commercialize the biotech's lead product teplizumab.

Under the agreement, Indianapolis-based Lilly will acquire the exclusive rights to teplizumab (MGA031), a humanized anti-CD3 monoclonal antibody that currently is being studied to treat Type I diabetes.

MacroGenics in August announced it was enrolling adults and children ages 8 to 35 with recent onset of Type I diabetes in a Phase II/III clinical trial to evaluate the safety and efficacy of three teplizumab dosing regimens. (See BioWorld Today, Aug. 3, 2007.)

The study, which is being conducted in 100 centers in 10 countries, is assessing the ability of teplizumab to inhibit the autoimmune attack that destroys insulin-producing pancreatic beta cells in individuals with Type I diabetes, said Sarah Kurz, senior program manager for MacroGenics.

If teplizumab is effective and has the ability to preserve or protect beta cells of the pancreas, patients may require less injected insulin and their blood glucose levels may be easier to control.

Kurz noted that it is important for patients to receive the drug within the first 12 weeks after diagnosis of Type I diabetes.

"We believe it will be more effective sooner than later," she told BioWorld Today.

Under the terms of the deal, Rockville, Md.-based MacroGenics will receive an up-front payment of $41 million and $3 million in other committed funds from Lilly.

The biotech firm also may receive up to $200 million in potential development milestones for the Type I diabetes indication.

If teplizumab, which was granted orphan drug status by the FDA in October 2006, makes it to market, MacroGenics also may receive up to $250 million in potential sales milestones and would receive double-digit royalties on sales commensurate with the current stage of development of the product, Kurz said.

Under the agreement, Lilly has an option to pursue other indications for teplizumab or other next-generation anti-CD3 molecules developed with MacroGenics. If any other products based on the anti-CD3 molecules developed under the Lilly deal gain approval, MacroGenics could receive more than $600 million in additional milestone payments.

The agreement allows the Maryland biotech, which acquired the intellectual rights to the anti-CD3 monoclonal antibody in July 2005 from Tolerance Therapeutics Inc., to have the option to co-promote teplizumab for certain indications in the U.S.

Lilly also has an option to make an equity investment of up to $10 million in MacroGenics' next private financing round or initial public offering.

MacroGenics, which also is developing investigational immunotherapeutics for cancer and infectious diseases, chose Lilly to partner on teplizumab because of the pharmaceutical giant's reputation as a "preeminent leader" in the field of drug development for diabetes and other autoimmune diseases, Kurz said.

Lilly has been involved in the development of diabetes products since 1923, according to the firm. It markets several diabetes drugs, including Humulin (human insulin) and Humalog (insulin lispro injection).

The company also co-markets the Type II diabetes drug Byetta (exenatide injection) with San Diego-based biotech Amylin Pharmaceuticals Inc.

Under a deal that expired in September 2006, Lilly will continue to receive royalties at a declining rate until September 2009 from Japanese firm Takeda Pharmaceuticals to market Actos (pioglitazone hydrochloride) in the U.S. The company continues to market the once-daily oral Type II diabetes drug in several foreign countries. Actos generated $97.8 million of revenue for Lilly in the third quarter, the firm reported Thursday.

"We look forward to continuing to work with Lilly on teplizumab," Kurz said, calling the Lilly deal a "coup" for her firm.

The MacroGenics' pipeline also includes MGAWN1. In July the FDA approved an investigational new drug application for the compound, a monoclonal antibody targeting West Nile virus.

The firm was awarded a $50 million contract in September 2006 from the National Institute for Allergy and Infectious Diseases to support the development of MGAWN1 through manufacturing and Phase II clinical trials.

There are no approved treatments on the market for severe West Nile virus infection. Patients with the infection are generally hospitalized and provided supportive care.

Published  October 19, 2007

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