XTL Biopharmaceuticals notified the Tel Aviv Stock Exchange (TASE) today that its collaboration with Cubist Pharmaceuticals Inc. (Nasdaq:CBST) on HepeX-B - a drug candidate for the prevention of re-infection with Hepatitis B following liver transplantation - would apparently not yield results.
Following a meeting with the US Food and Drug Administration (FDA), Cubist announced last night that direction on the regulatory pathway for approval created both operational and economic challenges. The size of the safety population the FDA is looking for translates to an extremely lengthy development timeline, as there are only about 500 liver transplants due to hepatitis B each year - across the US and Europe. At this point, Cubist has decided not to make any further investment in the HepeX-B program while the company evaluates strategic options for HepeX-B.
XTL discovered HepeX-B, and licensed the drug to Cubist in June 2004. Until now, HepeX-B was XTL's most advanced drug, but suspension of the program will not be a major financial blow. The drug was expected to contribute initial cash flow to XTL from Cubist on the basis of milestones and royalties. XTL never placed great hopes on this revenue.
In a recent report on XTL, Brean Murray Carett analyst Jonathan Ashcroft called HepeX-B the company's proven feasibility and said that the drug would not generate more than $17 million over the coming years. In addition, the news gives no indication about the quality of this or other drugs under development by XTL using similar technology.
XTL CEO Ron Bentsur said, "While we are disappointed, we consider the economic impact of Cubist's decision on XTL to be nominal as due to the size of the market for HepeX-B, we do not believe that the potential royalties from Cubist constituted a value driver for XTL. The key value drivers for XTL remain the two clinical programs in Hepatitis C, the pre-clinical program for Hepatitis C, and our in-licensing program."
Bentsur added that XTL plans to acquire rights to other products. The company has $35 million in cash.
Published by Globes [online], Israel business news - www.globes.co.il - on July 20, 2006
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