MethylGene exercises royalty right in cancer drug collaboration with Celgene

Sep 22, 2008 (Datamonitor via COMTEX) -- CELG | Quote | Chart | News | PowerRating -- MethylGene, a clinical stage, biopharmaceutical company, has exercised its right to convert to a royalty stream and milestone arrangement with Celgene for MGCD0103 as provided under the license and collaboration agreement between the companies formed in January 2006.

By taking this action, MethylGene, after a 90-day transition period, will no longer be responsible for funding development costs required to obtain market approval for MGCD0103, and Celgene will assume 100% of the program costs for its licensed territories.

In addition, MethylGene will receive royalties in lieu of profit sharing in North America and is eligible to receive milestone payments of up to $141 million, as agreed in the original contract between the companies. Celgene will also pay royalties to MethylGene on annual net sales in its territories.

MethylGene's royalties in North America will increase from a floor of 13% to a higher royalty range based on annual net sales reflecting MethylGene's co-development funding and contribution for MGCD0103 to date.

The royalty rate in other Celgene territories outside of North America remains in a 10 to 13% range based on annual net sales. MethylGene maintains its rights under the original terms of the agreement to co-develop and co-promote subsequent compounds, including second generation histone deacetylase inhibitors and sirtuin inhibitors for cancer.

Donald Corcoran, president and CEO of MethylGene, said: "We believe that MGCD0103 presents a promising opportunity for the treatment of cancer. After thoughtful and careful analysis conducted with outside consultants, we have concluded that converting to a royalty at this time is financially advantageous.

"Moving forward, while participating in the upside and potential of MGCD0103, we will be focusing on developing the two compounds of which we own 100% - MGCD290 which is expected to enter into Phase I clinical trials by the end of this year and, in particular, MGCD265 which is in two Phase I clinical trials."

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