Callida is finally cut loose — and maybe Nuvelo too.
After years of struggling with a change in its identity, Nuvelo has finished the sale of one of its former core assets — the sequencing concern Callida — in a step Nuvelo has been trying to take for at least two years.
The Dec. 3 sale of the business unit to SBH Genomics removes from Nuvelo most of the business assets it held when it was known as Hyseq, and it will continue to “monetize non-core assets” as it moves toward life as a drug developer, according to company officials and documents filed with the US Securities and Exchange Commission.
Nuvelo, which owned a 90-percent stake in the business, plans to use revenue from upcoming drugs, especially its direct thrombolytic alfimeprase, to fuel drug discovery based on its patents on rare genes, CEO Ted Love told Pharmacogenomics Reporter this week.
It seems to be a path similar to that traveled by Genaissance Pharmaceuticals, which recently licensed a selective serotonin-reuptake inhibitor from Merck in hopes of reviving the drug. “A number of companies have attempted to do it,” said Love.
Nuvelo and Affymetrix, which sold its own 10-percent stake in Callida to SBH Genomics, sold the concern for convertible promissory notes in the principal amount of $1 million and “potential additional payments” based on future revenues, according to documents filed with the SEC.
So What’s in the Pipeline?
“We recognize that our capacity to fund the company is driven by alfimeprase, particularly, and less so by rNAPc2 and ARC183, said Love. RNAPc2 is indicated for acute coronary syndrome, while ARC183 is indicated for anticoagulation during coronary artery bypass graft surgery.
Indeed, alfimeprase has largely dominated analyst coverage of Nuvelo as the drug approaches Phase III trials. The company hopes to begin Phase III in the first quarter of 2005, according to a Nuvelo statement. The market for the drug’s current indications, acute peripheral arterial occlusion and catheter occlusion, is “around $300 million” annually, and “maybe more if they go into stroke and deep-vein thrombosis,” said Pacific Growth Equities analyst Liane Moussatos.
The market for rNAPc2 depends upon the drug’s clinical performance, but a drug with indications similar to rNAPc2, Aventis’ Lovenox, accounts for about 30 percent of the ACS market, said Moussatos. The drug is currently in Phase IIb trials, but Nuvelo will probably not enter it into Phase III without a partner, she said.
As a direct thrombin inhibitor, ARC183 shows a little more promise — it “should be at least a couple-hundred million [dollar] drug or more, if it pans out,” said Moussatos. The drug is going through Phase I trials at the moment.
On the Other Side of Alfimeprase’s Glamour
In any case, the research program seems to be taking steps forward. An undisclosed drug with undisclosed indications under development by Nuvelo is slated to begin IND-enabling studies “by the end of the year,” said Love. He declined to say whether the drug resulted from research collaborations or internal efforts. “But that’s a goal that we will be able to meet,” he said.
Of Nuvelo’s approximately 80 employees, “about 30 work in the basic discovery efforts” based on the company’s genomic assets, said Love.
But the amount of resources devoted to new drug development, as opposed to the development of in-licensed drugs is “very little,” said Moussatos. She estimated that “under 5 percent” of the company’s R&D budget is currently devoted to these projects. Instead, Moussatos characterized the company as an acute-care cardiovascular drug-development company.
At one time, Nuvelo disclosed that it had filed patent applications on “more than 10,000 human genes,” said Love. It has since scaled back its focus to “several hundred” genes for which it has filed the best data in patent applications, he added.
Without a doubt, what Nuvelo needs in the long-term is research that will transform those genes into money-making drugs. “The IP position for a starting point is nice, but it’s not nearly as important as really having an understanding of what the genes do,” said Love.
The research arm of Nuvelo is divided into programs devoted to genes for secreted proteins and those that may provide therapeutic antibody targets. As part of its secreted protein research, Nuvelo agreed in August 2001 to provide 50 genes to the pharmaceutical division of the Japanese brewer Kirin, which tests their potential as drug targets in mouse knock-in experiments.
The companies agreed to split the proceeds of any resulting products, each selling in its primary territory — Japan and Australasia for Kirin and the United States for Nuvelo, while sharing Europe — and paying the other royalties. “We’ve definitely made progress,” said Love, although he declined to disclose any details.
A similar partnership existed with Deltagen, which filed for bankruptcy in June last year, in which the defunct company performed knock-out studies using Nuvelo’s genes.
Where do Callidas Come From?
Callida was created in October 2001 as the answer to a four-year microarray patent dispute between Affy and Hyseq. But the transformation of Hyseq was soon set in motion, and, in fact, Love mentioned the possibility of selling the subsidiary as early as August 2002 [see the August 2002 issue of Genome Technology, Pharmacogenomics Reporter’s sister publication].
As Hyseq, the company merged with Cambridge, Mass.-based Variagenics in January 2003, changing its name to Nuvelo [see Pharmacogenomics Reporter’s sister publication, GenomeWeb News, 2/24/2003]. But Nuvelo soon sold Variagenics’ chemical cleavage patent holdings to Sequenom in September 2003, and it still plans to divest other parts of that business along with the rest of its genomics property, with the exception of its rare-gene IP [see Pharmacogenomics Reporter, 5/13/2004].
— CW