MethylGene cuts staff

Celgene has terminated its licensing agreement with MethylGene for oncology histone deacetylase (HDAC) inhibitors, including MGCD0103. As a result, MethylGene will reacquire all rights to MGCD0103 and other HDAC and sirtuin inhibitors in territories licensed to Celgene including North America and the EU. As part of the termination provisions, Celgene will continue to support MGCD0103 for a period of 90 days to ensure a smooth transition. As a results of this, MethylGene will implement a strategic initiative to focus its resources on the clinical development of its proprietary pipeline.

In August, the FDA placed a partial clinical hold on MGCD0103 studies as a result of the voluntary suspension of enrolment of new patients into trials evaluating the drug following observations of pericarditis or pericardial effusion in 19 subjects out of approximately 400 patients treated. Under the partial clinical hold, patients currently enrolled in MGCD0103 trials who are confirmed to have no signs or symptoms of pericarditis or pericardial effusion may continue in their respective studies. MethylGene believes that regaining exclusive rights to MGCD0103 will allow it to accelerate submissions to the FDA aimed at lifting the partial clinical hold.

The termination of the agreement does not affect MethylGene's relationship with Taiho Pharmaceutical for Japan and certain other Asian countries. Celgene acquired the rights to MGCD0103 through its March 2008 acquisition of Pharmion. MethylGene now owns the worldwide rights to three compounds, MGCD0103 (with the exception of certain Asian territories), MGCD265 and MGCD290, all of which are at various stages of clinical development.

MethylGene also announced that after a review of the company's current research, development and business activities, it will focus on advancing its clinical pipeline, which represents the most attractive, near-term value-generating opportunities. Accordingly, the company will begin a process to discontinue its discovery research activities, including a phased workforce reduction. The first phase of the reduction will occur over the next two months with additional reductions planned during 2009 as funded discovery research with Celgene for sirtuin inhibitors for cancer and with Otsuka Pharmaceutical for kinase inhibitors for ocular diseases are concluded. It is expected that approximately half of the company's current staff of 109 full-time employees will be affected by the transition when completed as planned.

With the implementation of this initiative, it is estimated that MethylGene will have sufficient resources to carry out currently-planned development and operational activities into approximately the third quarter of 2010. These plans include the continuing development of MGCD265 into Phase II trials, MGCD290 through Phase I studies and pursuing the removal of the partial clinical hold on MGCD0103. MethylGene will evaluate progressing MGCD290 into Phase II trials after reviewing Phase I data and evaluating potential partnerships and/or additional funding requirements. The company will also evaluate the status of MGCD0103 once the compound is released from partial clinical hold.

Matthew Dennis - Editor, Cancer Drug News