Two Compounds Supported by JDRF Donations Sell to Lilly and Glaxo for Staggering Sums of Money

On January 6, 2007, the JDRF announced that it was giving $2 million to MacroGenics, a private biotechnology company, to fund a phase II/III clinical trial of teplizumab, a compound owned by MacroGenics. Teplizumab is an antibody engineered to disarm immune T cells once they’re set to destroy islets, so it may preserve beta cell function in newly diagnosed diabetic patients.

The $2 million was awarded as part of the JDRF’s “Industry Discovery and Development Partnership program,” which allows the JDRF to “partner with” private, for-profit businesses that have the potential to develop medicines for type 1 diabetes.

Now, just nine months later, MacroGenics Inc. has entered into a deal with Eli Lilly to develop and commercialize teplizumab, and the payoff could be more than $1 billion. Under the agreement, Lilly will acquire the exclusive rights to teplizumab. MacroGenics will receive an up-front payment of $41 million and $3 million in other funds from Lilly. MacroGenics also may get up to $200 million in potential development milestones. If teplizumab, which was granted orphan drug status by the FDA in October 2006, makes it to market, MacroGenics also may receive up to $250 million more, as well as double-digit royalties on sales.

In August 2006, the JDRF also contributed $3.5 million to Tolerx, Inc., for a phase III trial of another antibody, known as TRX4 or otelixizumab, that might preserve beta cells from autoimmune attack. TRX4 received orphan drug status from the FDA in February 2006. Now Tolerx has signed a deal worth $760 million with GlaxoSmithKline to develop that drug. Tolerx will receive an upfront payment of $70 million and up to $155 million in future development costs of otelixizumab in type 1 diabetes. If all goes well, the firm may earn up to $350 million for approvals of otelixizumab and $175 million in sales milestones, plus royalty payments.

When contacted today, the JDRF reported that it has specific contracts with each of its many partner for-profit companies. When any drug that it has supported reaches certain milestones of development, such as outright commercialization, the JDRF then receives its investment back, and possibly more. The JDRF emphasizes, however, that the recent news about otelixizumab and teplizumab is just what it was hoping for when it gave financial support to the drugs in their early stages. It appears that as far as the JDRF is concerned, the baby drugs it nurtured have grown some feathers and are getting ready to fly. Hopefully, people with type 1 diabetes will eventually benefit.

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Source: CNN; TolerRx website; the JDRF

For more information on the JDRF partnerships, see “A Pony For a Cure”.

What is an Orphan Drug?

Any rare malady that affects fewer than 200,000 Americans or fewer than five people in 10,000 is called an orphan disease. The name stems from their general neglect by the pharmaceutical powers that be. Because pharma companies are not likely to spend big bucks developing a drug for so few potential buyers, the FDA has sweetened the pot for those who are willing to develop orphan drugs for orphan diseases. Such companies are rewarded with tax reductions (up to 50 percent of costs), fee waivers, and a monopoly on sales of the orphan drug for seven years post-approval.

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