By Doug Macron
Quark Pharmaceuticals announced this week that Novartis has acquired an option to exclusively license worldwide the company's phase II p53 inhibitor QPI-1002, marking the second product-specific deal the Israeli RNAi drug shop has forged with a big pharma.
Under the terms of the deal, Quark will receive a non-refundable $10 million payment from Novartis. Should the option be exercised, Novartis will then pay Quark fees and milestones totaling up to $670 million, in addition to royalties on product sales.
The agreement comes as Quark weighs going public on the Tel-Aviv Stock Exchange, a move the company's top official said would position the firm to meet its ultimate goal of floating its shares on the Nasdaq.
Specific terms of the option arrangement were not disclosed, but Quark CEO Daniel Zurr told Gene Silencing News that upon the achievement of "certain milestones, [the option] turns into a licensing agreement." He declined to elaborate.
Should Novartis exercise the option, it would assume all responsibility for QPI-1002, which is currently being tested by Quark in separate phase II studies as a prophylactic against acute kidney injury in patients undergoing cardiac surgery, and to prevent delayed graft function associated with kidney transplantation.
"We will participate in some development" of QPI-1002 if it is licensed, Zurr noted, "but it will become theirs fully."
According to Quark, temporarily blocking the expression of p53, a stress-response gene associated with apoptosis induction, can prevent ischemia-reperfusion-induced acute kidney injury in patients taken off a cardiopulmonary bypass pump, or in patient's whose blood flow is re-established to a transplanted kidney.
For these indications, Novartis is "an ideal partner," Zurr noted, given the company's expertise in organ transplantation — the company markets a drug called Zortress that prevents kidney transplant rejection due to immune responses — as well as in intensive care indications, in general.
At the same time, the Swiss pharmaceutical giant has been a key player in the RNAi drugs space since 2005 when it inked a broad drug-discovery and -development deal with Alnylam Pharmaceuticals (GSN 9/9/2005).
Exercise of the option would also give Novartis the right to pursue development of QPI-1002 for any other indication it chooses, Zurr added. For instance, in 1999, Quark collaborators at the University of Illinois at Chicago published data in Science showing that temporary inhibition of p53 could protect mice from the side effects of chemotherapy.
If Novartis acquires QPI-1002, it would become the second big pharma to pick up a Quark drug candidate. The first was Pfizer, which in 2006 snagged the rights to Quark's wet age-related macular degeneration and diabetic macular edema treatment RTP-801i, now PF-655 (GSN 9/28/2006). That drug is currently in phase II testing for both indications.
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Although Quark views the two deals as validations of its technology and a key source of funding, out-licensing its clinical candidates is "not our long-term strategy," Zurr said.
Developing drugs "costs a lot of money, of course, and we are a small company and have to [part ways with] some of our assets to enable us to [develop] other assets," he explained. Still, "I hope that we will find a way to carry our own drug all the way through" to the market.
Indeed, although Quark closed a $10 million private financing round in June (GSN 6/10/2010), it remains on "the lookout for getting more money," Zurr noted. "Unfortunately, this is the fate of any biotech company."
In 2007, the company flirted with the idea of going public in the US, but dropped those plans due to unfavorable market conditions (GSN 8/2/2007).
But now the company is considering another approach: an initial public offering on the Tel-Aviv Stock Exchange.
"We are looking seriously at the possibility of floating our shares" in Israel, Zurr said. "The idea is to maybe do it as a preliminary step before moving to the Nasdaq. … We are looking at it seriously and are talking to all of the major underwriters in Israel."
"The market is really strong now in Israel, especially compared to the US," he added, and floating its shares in its native country would "improve our cash position so we can push [forward] more products on our own."
This, in turn, would put Quark in a better position to approach the US market, specifically the Nasdaq, when it feels the time is right, he said.
Zurr said that Quark would like to raise in the neighborhood of $40 million through an Israeli IPO because if it cannot raise "tens of millions of dollars … it is really not worth the exercise."
While nothing is set in stone and the company has not yet signed on with an underwriter, if it does pursue listing on the Tel-Aviv Stock Exchange, "it would be within the next two or three months because [the market there] is robust, but I don't know how long it will be robust," Zurr said.