Roche One-Ups Partner

Is old school, family-owned Roche trying to upstage its younger, sexier biotech partner? A recent partnership of near-blockbuster proportions may seem to say yes.

At a time when some investors have questioned whether Genentech, in which Roche owns a majority stake, has a robust enough offering in early-stage R&D, Roche is bolstering its oncology pipeline. The drug giant has partnered with Berkeley, CA-based Plexxikon to develop a targeted cancer therapy in a hefty deal that could be worth more than $700 million. (Genentech, although a significant source of Roche's oncology revenue here and abroad, is not involved in the deal.)

While Roche and Genentech have a number of programs in the works to expand indications for drugs like Avastin (bevacizumab) and Rituxan (rituximab), both companies are seeking to add more novel molecules to their pipelines.

The recent Roche deal involves Plexxikon's lead compound, PLX4032, which targets the BRAFV600 gene mutation. The mutation is seen in about 70 percent of melanoma patients and 60 percent of colorectal cancer patients. It is also seen in a large number of thyroid cancer patients.

"These patients seem not to respond as well as others do," said Plexxikon CEO K. Peter Hirth. "The consistent theme is that whenever you have that mutation, the outcome is very poor."

In total, about 100,000 cancer patients are estimated to have the mutation. The size of the Roche-Plexxikon deal could be an indication of the PLX4032 market potential.

Roche became interested in the compound because it selectively inhibits a single kinase, and targets a protein found only in diseased tissue. It also offers a favorable side-effect profile.

"The partnership will bring Roche into melanoma," said Roche's global head of pharma partnering, Peter Hug, "a move consistent with our continued efforts to address areas where there is a high unmet medical need and where we can make a positive difference in patients' lives."

For Plexxikon--a five-year-old company also developing compounds for metabolic, central nervous system, and inflammatory disorders--the deal provides access to Roche's international marketing muscle. The partnership also allows the smaller company to build its own sales force in the United States.

"We determined that Roche thinks very much along the same lines in terms of approaching development," said president Kathleen Glaub. "We'll have a seat at the development table--and that was very important to us."

Plexxikon submitted an IND for PLX4032 earlier this month, and Phase I clinical trials are expected to start by the end of the year. Later-stage trials could begin in the third quarter of 2007, according to Plexxikon's Hirth.

PLX4032 is the lead compound in the deal, but Roche will also have licensing rights to other inhibitors of the BRAF kinase being developed at Plexxikon.

Plexxikon also is collaborating with Roche Molecular Diagnostics on an in-vitro assay to screen for the presence of the BRAFV600 gene, and to identify potential responders.

The deal includes a $40 million upfront payment from Roche, $6 million in guaranteed research funding, up to $660 million upon completion of certain development milestones, and royalty payments.