Onyx bows out of $550M JAK2 collaboration with S*BIO

Onyx Pharmaceuticals has bowed out of its $550 million collaboration deal covering two JAK2 inhibitor programs in development at Singapore's S*BIO. The California cancer drug developer anted up a $25 million upfront payment at the beginning of 2009 to gain options on a license for the U.S., Canadian and European rights on all indications covered by SB1518 and SB1578, beginning with myelofibrosis with the potential to branch out into a range of cancer and autoimmune diseases. Now S*BIO says it is back in control of worldwide rights as it stands at the threshold of a pivotal trial slated to begin later this year.

"Consolidating North American and European rights for SB1518 and SB1578 represents a unique opportunity for S*BIO to steer the global development of these two promising products," said Dr. Jan-Anders Karlsson, CEO of S*BIO. "Our strong relationship with Onyx has led to the successful clinical advancement of both SB1518 and SB1578.  SB1518 has now reached a critical inflection point where its future success in a highly competitive field depends on an aggressive and focused development plan. As an existing shareholder, Onyx's interests remain aligned with S*BIO's objective to maximize the value of the JAK2 program and to share in the upside potential of SB1518 and other S*BIO assets."

SB1518 recently began a mid-stage study for a second indication: advanced lymphoid malignancies. Researchers announced at ASH that in Phase I three patients demonstrated a partial response to the drug and 15 patients maintained stable disease states. The majority of the responses were sustained for greater than two months.

"I think it's good," Karlsson tells FierceBiotech about today's announcement. He went on to add that Onyx had a different set of priorities to consider. "They are still a big shareholder," he added, so Onyx can benefit in different ways now. 

The end of the development pact leaves S*BIO with a couple of options. The developer can go ahead and launch a Phase III study of SB1518 in the second half of the year on its own, recruiting 400 or 500 patients who will get treatment for a year, or a new partner can step in. S*BIO will have to get new funding ahead of any launch, says the CEO, but that could come from a near-term venture round or collaborator. Looking further ahead, he said, it might be possible to go public as well, though Karlsson ruled out an IPO this year considering the current condition of the market.

It's quite common for biotech companies to spin the end of a collaboration as a positive development, expressing as much enthusiasm for the termination of a pact as they would for a deal-signing ceremony. Sometimes that happens. Exelixis circled all its wagons around cabozantinib after Bristol-Myers walked away from the development program and its clinical success so far has been rewarded with a rising share price. But the same economics that drive a biotech to collaborate in the first place--looking for an experienced player with deep pockets to cover late-stage costs--remain.

- here's the S*BIO release