Biota strengthens Sankyo agreement

Biota Holdings' (ASX:BTA) second-generation influenza program has leap-frogged into clinical trials thanks to a partnership with a Japanese competitor.

Acting on the maxim "if you can't beat them, join them", Biota has signed a landmark agreement with one of Japan's largest pharmaceutical companies, Sankyo, to take new flu treatments to market.

Sankyo boasts annual worldwide sales of AUD$7.3 billion and is credited with having discovered the statin class of lipid lowering drugs.

The collaboration and license agreement covers Biota's second-generation flu compounds, Flunet, and a comparable Sankyo compound, R118958, which is already in human clinical trials.

Under the terms of the agreement the companies will cross-license their relevant patents and pool their flu drug compounds into a single product pipeline, which would then be offered to prospective licensing partners.

Biota group chief executive Peter Molloy said the deal propelled the company directly into human clinical trials, putting it up to 18 months ahead of schedule had the company chosen to go it alone.

"It brings together two otherwise competitive programs into a single, robust pipeline of improved influenza drugs, which should be attractive to pharmaceutical companies seeking partnering opportunities," Molloy said.

"In addition, the agreement effectively combines all the potential partners that Sankyo has been talking to, with those who have shown interest in Biota's drug candidates, giving us a much richer pool of partnership prospects."

The two companies will next establish a joint licensing committee to conduct discussions with potential partners regionally and globally.

It is expected that all future development work on the compounds will be funded by licensing partners, with all licensing revenues, milestone payments and royalties arising from such partnerships to be shared equally between Biota and Sankyo.

While Biota pioneered the use of inhaled neuraminidase inhibitors with its breakthrough drug Relenza, launched in 1999, the company's second generation long-acting Flunet compounds are currently still at the pre-clinical stage.

The partnership with Sankyo gives Biota shared rights to the Japanese company's own long-acting neuraminidase inhibitor, R118958, which has already completed a Phase I human clinical safety study.

Biota estimates the cost of taking its Flunet compounds to the same stage as R118959 as being about AUD$6 million.

But under the agreement, the Melbourne company's compounds will be temporarily shelved with the focus instead placed on accelerating the path to market for Sankyo's compound.

The Flunet compounds will be retained as a back-up in case R118959 can not be taken through to commercialisation.

Biota's Molloy said that while current total sales of twice-daily fly treatments are a relatively modest AUD$450 million globally, the company believes the market holds "significantly greater potential" with a longer acting product.

Biota shares were trading up 1.7 per cent at 61 cents at the time of writing.