Pharmion/MethylGene North America, E.U. and International Licensing Agreement

Jan. 30, 2006:

PRNewswire-FirstCall/ -- Pharmion Corporation (Nasdaq: PHRM) and MethylGene Inc. (Toronto: MYG) today announced a license and collaboration agreement for the research, development and commercialization of MethylGene's histone deacetylase (HDAC) inhibitors in North America, Europe, Middle East and certain other markets. This collaboration includes MGCD0103, MethylGene's lead HDAC inhibitor, as well as the company's pipeline of second generation HDAC inhibitor compounds for oncology indications. HDAC inhibitors are a new class of compounds that inhibit histone deacetylation, a process that regulates gene expression. MGCD0103 is an oral compound currently in multiple Phase I clinical trials in solid tumors and hematological malignancies and one combination Phase I/II trial with Vidaza (azacitidine for injectable suspension) for high risk myelodysplastic syndromes (MDS) and acute myelogenous leukemia (AML)...

Under the terms of the agreement, MethylGene will receive from Pharmion up front payments totaling $25 million, consisting of a $20 million license fee and a $5 million equity investment in MethylGene common shares. The common shares will be purchased at a subscription price of CDN $3.125 which represents a 25 percent premium over the market closing price on January 27, 2006 resulting in Pharmion's 7.8 percent ownership (basic) in MethylGene.

Pharmion's milestone payments to MethylGene for MGCD0103 could reach $145 million, based on the achievement of significant development, regulatory and sales goals, with the nearest-term milestone of $4 million to be paid upon enrollment of the first patient in a Phase II trial. Furthermore, up to $100 million for each additional HDAC inhibitor may be paid, also based on the achievement of significant development, regulatory and sales milestones. In addition, Pharmion will provide one year of research support ($2 million) for a team of eight MethylGene scientists dedicated to identifying second generation clinical candidates in addition to MGCD0103.

MethylGene will initially fund 40 percent of the preclinical and clinical development for MGCD0103 (and any additional second generation compounds) required to obtain marketing approval in North America while Pharmion will fund 60 percent of such costs.

MethylGene will receive royalties on net sales in North America ranging from 13 percent to 21 percent. The royalty rate paid by Pharmion to MethylGene will be determined based upon the level of annual sales achieved in North America and the length of time development costs are funded by MethylGene. MethylGene will have an option, at its sole discretion, as long as it continues to fund development, to co-promote approved products and, in lieu of receiving royalties, to share the resulting net profits equally with Pharmion. If MethylGene exercises its right, at its sole discretion, to discontinue development funding, Pharmion will be responsible for 100 percent of development costs incurred thereafter.

In all other licensed territories, which include Europe, the Middle East, Turkey, Australia, New Zealand, South Africa and certain countries in Southeast Asia, Pharmion is responsible for development and commercialization costs and MethylGene will receive a royalty rate of 10 to 13 percent based on annual net sales.

MethylGene previously executed an agreement for MGCD0103 (and its second generation oncology HDAC inhibitors) with Taiho Pharmaceutical Co., Ltd. for Japan, Korea, Taiwan and China. A Global Development Committee will be formed among Pharmion, MethylGene and Taiho to share data and coordinate the development program on a global scale.

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