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Alder Expands Partnership with Schering-Plough, Adds “Significant” Upfront Cash

Xconomy Seattle — 

Alder Biopharmaceuticals, the Bothell, WA-based developer of antibody drugs, is announcing today it has broadened its four-year-old partnership with Kenilworth, NJ-based drug giant Schering-Plough. The new deal calls for Alder to develop new targeted therapies against an undisclosed target on cells associated with a common neurological disease.

Financial terms of the deal aren’t being disclosed, but it provides upfront cash, milestone payments for success in development, and royalties on sales if Alder’s technology ever leads to an approved product for Schering-Plough. The money will provide a “significant” cash stream to Alder, and will pay the salaries of five workers at the company, says CEO Randy Schatzman. He wasn’t allowed to say which disease the drug is supposed to treat, although it represents “a very large market,” Schatzman says.

Alder struck its original partnership with Schering-Plough (NYSE: SGP) back in December 2005, with a primary goal of making 10 different antibody drug candidates, to prove its novel technique of making them in fast-dividing yeast cells was really as good as it was cracked up to be. Alder has said it can craft new antibody drugs in a matter of a few weeks, instead of a year with standard methods; its drugs ought to be effective at lower doses, require fewer injections, and could possibly be engineered to have fewer side effects.

Once Alder cleared a battery of scientific tests, Schering-Plough sent over one of its hardest problems—finding a way to make a drug against a novel marker on cells that no other drug could hit. If Alder can make a drug that truly blocks this target, it could tap into one of the more lucrative markets in the pharmaceutical industry. Antibody products are expected to generate $30 billion in worldwide sales in 2009, an annual growth expected of about 14 percent annual through 2012, according to Datamonitor.

“When they came to us for help, they had already thrown everything at it,” Schatzman says. “For better or worse, we’ve been getting their hardest targets.” Alder has been able to solve the problem in the lab, although he couldn’t get into specifics about how.

Alder now will be charged with whipping up a new batch of a variety of candidate antibody drugs against the target, that Schering-Plough can pick to run with in clinical trials.

Schering-Plough is best known for its consumer brands like the allergy pill Claritin, or Coppertone sunscreen, but it has had increasing interest in targeted antibody drugs over the years. The company owns European marketing rights to the blockbuster arthritis drug infliximab (Remicade) and another recently FDA-approved arthritis drug, golimumab (Simponi). Both of those products are marketed in the U.S. by Johnson & Johnson.

Schering-Plough has teamed up with Alder in hopes it will be able to develop next-generation antibody drugs, while retaining worldwide rights to itself, Schatzman says. These big-selling products could soon be merged into an even bigger portfolio of biotech products, as Schering has a pending agreement to be acquired by drug giant Merck for more than $40 billion. Merck, too, has shown growing interest in antibody drug development for years, through its 2005 acquisition of Lebanon, NH-based GlycoFi for $400 million. That deal gave it a different method for making antibodies in yeast, and is a cornerstone of Merck’s more than $1.5 billion investment in making biologic drugs derived from living cells, rather than conventional drugs made from synthesizing chemicals.

Alder, which has 44 employees, has quietly been emerging this year as one of the more promising biotech companies in the Northwest. It has collaborations with two Big Pharma companies that have insisted they remain anonymous to keep competitors in the dark, Schatzman says. It also has partnerships with Bothell, WA-based Seattle Genetics and Denmark-based Genmab.

Bigger news could be on the way soon from Alder, from its ALD518 drug candidate. The company owns 100 percent commercial rights to this drug, which is currently in a pair of randomized mid-stage clinical trials, with 120 patients each, to gauge its potential as a treatment for rheumatoid arthritis and a severe form of cancer-related fatigue known as cachexia. Alder expects to take its first look at the Phase II data from the rheumatoid arthritis trial later this month, and it will get to see the cancer drug results in July. It hopes to present the arthritis results at the American College of Rheumatology meeting in the fall, Schatzman says.

Alder is already in talks with potential partners to help finish development of the drug for rheumatoid arthritis, and there has been “a lot of interest,” Schatzman says. The clinical trial data will be the key, as those companies want to see the program “de-risked” before they pay serious money to take an ownership piece of the drug, he says.