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Chiron Licenses Compound to TB Drug Development Group

January 31, 2002

Emeryville, California, Feb. 1 (Bloomberg) -- Chiron Corp. agreed to license rights for an experimental compound to a non-profit group dedicated to developing new tuberculosis treatments.

The biotechnology company may make and market medicines that come out of the research by the Global Alliance for TB Drug Development. The agreement is the first of its kind between a nonprofit agency and a for-profit business, the alliance said.

Tuberculosis kills 2 million people each year, making it the greatest single infectious cause of death, and existing medicines for the disease are more than 30 years old. The high cost of research and small profit potential in markets where TB is common have discouraged companies from developing new treatments, said the alliance, which will work on Chiron's experimental drug known as PA-824 and related compounds.

"We can acquire a strategic property, invest as we see fit, and in the end the value is not profit, but getting the drug to market,'' said Maria Freire, the alliance's chief executive officer. "Clearly, it takes the same amount of money to develop a TB drug or a central nervous system drug, but when companies look at it from financial terms, they can't justify to stockholders the investment it takes.''

The average cost of developing a new drug is $802 million, according to the Tufts Center for the Study of Drug Development. The alliance estimates it can develop and bring a TB drug to market by 2010 for $200 million to $300 million.

Shares of Chiron fell 11 cents to $42.26.

Licensing

Chiron will receive a licensing fee, plus an option to buy back rights to the drug during clinical development if it proves successful in human testing. If the drug makes it to market, Emeryville, California-based Chiron may receive royalties in U.S., Canadian, or certain European markets, though it waives payments from drugs sold in so-called "endemic markets,'' the poor countries where TB is widespread, the alliance said.

"Chiron, like most companies are always trying to manage (drug-development) portfolios, and programs like TB fall to the bottom,'' said Craig Wheeler, president of Chiron's biopharmaceuticals unit. "It's a nice arrangement because it allows us to take a look at the molecule in development with a lower risk.''

The alliance was founded two years ago by an international assembly of scientists, drugmakers and public health organizations.

It joins a growing group of nonprofit organizations, such as the International AIDS Initiative and Medicines for Malaria Venture, whose mission is to develop affordable drugs for countries with the highest rates of these infectious diseases. New TB drugs are needed because resistant forms of the bacteria that cause the disease have emerged.

New Drugs Needed

New TB drugs are needed because resistant forms of the bacteria that cause the disease have emerged. Existing treatment is a regimen of four anti-tuberculosis drugs.

Because the drugs must be taken for six to nine months, patients often drop out of treatment, putting them at risk for developing resistance and worsening disease.

The compound licensed from Chiron has shown promise in animal studies in attacking both dormant and active forms of the bacterium. The TB bacteria may reside in an inactive form in body organs for months or years.

The alliance said it is able to cut the cost of developing a drug by negotiating licensing agreements for promising compounds from companies, then using its private and public research partners to perform development work at cost.

The alliance receives funding from organizations including the Bill and Melinda Gates Foundation and the Rockefeller Foundation. The group currently has about $40 million in cash to fund its projects.