February 16, 2011 / 9:03 PM / 7 years ago

Astellas to pay Aveo $125 mln in cancer drug deal

* Astellas gets worldwide rights to tivozanib outside Asia

* Aveo eligible for up to $1.3 bln in milestone payments

* Aveo due $90 mln for filing and approval of tivozanib

* Tivozanib in Phase III trial for advanced kidney cancer

By Bill Berkrot

NEW YORK, Feb 16 (Reuters) - Japan's Astellas Pharma Inc(4503.T) said it agreed to pay $125 million in cash to Aveo Pharmaceuticals Inc (AVEO.O) for worldwide rights outside of Asia to the drug tivozanib, which is in late stage clinical development for advanced kidney cancer.

Aveo would also be eligible to receive up to an additional $1.3 billion in future payments based on regulatory and sales milestones, the companies said.

Some $90 million of that would be due for filing for and receiving marketing approval for tivozanib in kidney cancer, meaning that could be realized in the fairly near term.

Tivozanib, which blocks VEGF receptors needed for tumor growth, is being tested against Onyx Pharmaceuticals Inc's ONXX.O kidney cancer drug Nexavar in the pivotal Phase III study that will yield the data needed for seeking approval.

Massachusetts-based Aveo could realize more than $780 million in eventual commercial milestones under terms of the deal. Another $485 million is available for clinical and regulatory milestones achieved in other types of cancer.

The companies believe tivozanib could work against a broad range of solid tumor cancers.

"Oncology is a high-priority therapeutic area for Astellas," Chief Executive Masafumi Nogimori said in a statement, adding that he expects the pivotal Phase III kidney cancer trial to succeed.

The Phase III trial is designed to demonstrate greater progression free survival -- or time until the disease worsens -- compared with Nexavar. Aveo is expecting initial data from the study in the middle of this year.

"We also strongly believe tivozanib has significant potential in multiple cancers and we look forward to working together to maximize the market opportunities," Nogimori said.

Astellas and Aveo will share equally all North American and European development and commercialization costs and profits for tivozanib. Astellas will be responsible for the development and sales costs elsewhere and pay Aveo a tiered, double-digit royalty on sales in those territories.

Japan's Kyowa Hakko Kirin Co (4151.T) holds the rights to develop and sell tivozanib in Asia. (Reporting by Bill Berkrot, editing by Dave Zimmerman)

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