Idera Pharmaceuticals Inks Potential $400 Million-Plus Deal with Germany’s Merck

Idera Pharmaceuticals (NASDAQ:IDRA) has netted its third major deal in about as many years. This one, potentially worth upwards of $400 million to the Cambridge, MA-based biotech, is a collaboration with Germany’s Merck KGaA around cancer-fighting compounds that might boost the body’s ability to fight tumors. This type of immune-based therapy has pretty much been a disappointment against cancer, but there’s hope that new approaches will change all that.

The deal also heats up a long-standing rivalry between Idera and Wellesley, MA-based Coley Pharmaceuticals, which Pfizer recently agreed to buy. Along with California’s Dynavax Technologies, Coley and Idera are the world’s leaders in developing molecules against this target, and until recently, Coley seemed to have the most traction.

Under the terms of the agreement, Idera receives $40 million up front, then is eligible for milestone payments of up to $381 million, plus royalties for commercialized products. The deal covers two prospective drugs already in development, as well as possible new ones aimed at the same target.

Idera was originally founded in 1989 as Hybridon. The company was renamed in 2005, when management decided to focus on molecules that either turn on or turn off Toll-Like-Receptors: these receptors, of which there are several types, are thought to help rally the body’s own disease-fighting immune response. Things started heating up for Idera in May 2005, when it inked a deal potentially worth $141 million with Novartis for treating asthma and allergies. Then, in December 2006, Idera netted a vaccine development deal with Merck & Co. (the U.S.-based drug giant) around cancer, infectious diseases, and Alzheimer’s.

The deal announced yesterday hinges on what are called Toll-Like Receptor 9 agonists, the most popular of the Toll-Like Receptor molecules. In fact, “No. 9” was a red hot target until last summer, when a compound in that class did poorly in a critical trial. Pfizer and Coley were collaborating on that one, and after the setback Coley’s shares plunged, bringing competitor Idera’s down significantly as well. Not long after that, Pfizer agreed to buy Coley for $164M.

Idera CEO Sudhir Agrawal says the Coley trial failure was just “a blip” and has no substantive ramifications for the field. He also says it had no effect on his negotiations with collaborators. “I think they [Pfizer/Coley] probably had a problem with dose and dose scheduling,” he says. Because of their complex actions, molecules that stimulate the immune system have to be very carefully dosed: too much drug can actually lead to less of an effect, he says.

Pfizer is still working with Coley, but the companies have switched their strategy. Instead of using Toll-Like Receptor 9 agonists in combination with traditional cancer therapies, which was the original approach, they are now matching Coley’s compound with some of the newer ‘targeted’ cancer drugs that are designed to home in more specifically on tumor cells. Agrawal says Idera and its new partner, Germany’s Merck, will pursue both strategies. “Our studies show you can combine these with chemotherapies and targeted agents,” he says.

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