Healthcare Industry News:  chronic myelogenous leukemia 

Biopharmaceuticals Oncology Licensing

 News Release - March 27, 2006

SGX Pharmaceuticals Announces Strategic Collaboration to Develop and Commercialize BCR-ABL Inhibitors for the Treatment of Chronic Myelogenous Leukemia (CML)

Collaboration Focused on Expanding Treatment Options for Patients With CML

SAN DIEGO, March 27 (HSMN NewsFeed) -- SGX Pharmaceuticals, Inc. (Nasdaq: SGXP ) announced today that it has entered into a license and collaboration agreement with Novartis focused on the development and commercialization of BCR-ABL inhibitors for the treatment of drug resistant chronic myelogenous leukemia (CML).

Under the terms of the agreement, SGX will receive from Novartis $25 million in upfront payments and the purchase of SGX common stock. Along with success-based milestones, but excluding royalties, total payments to SGX could exceed $515 million, including a minimum of two years of research funding.

The success of Gleevec(TM) (imatinib), the first targeted therapy in Philadelphia Positive (Ph+CML) proven to inhibit BCR-ABL, has fundamentally changed the treatment of Ph+CML. However, a subset of patients develops resistance to Gleevec or cannot tolerate therapy. For these patients there are currently no other approved treatment options. Drug candidates from SGX's lead series, developed from its FAST(TM) proprietary drug discovery platform, have exhibited activity against wild-type and drug resistant BCR-ABL mutants, including the most challenging T315I mutant.

"Novartis is the leader in developing novel targeted therapies to treat CML," said Mike Grey, president and chief executive officer of SGX Pharmaceuticals. "With their extensive experience developing and commercializing Gleevec as well as development of the novel investigational compound, nilotinib/AMN107, we believe they are the ideal partner with whom to develop our series of next-generation BCR-ABL inhibitors. This is a tremendous validation of our FAST technology for generation of novel lead molecules for key therapeutic targets."

Background on the Agreement

SGX will be responsible for completing preclinical development of the lead candidate and submitting an Investigational New Drug application with the Food and Drug Administration. SGX will also be responsible for the completion of an initial phase I clinical study, after which time Novartis will be responsible for conducting further clinical development and commercialization of the compound.

In addition to the upfront and milestone payments, SGX will receive royalty payments upon successful commercialization of products developed under the collaboration. SGX retains an option to co-commercialize, in the U.S., oncology products developed under the agreement. If exercised, the option would enable SGX to reinforce the commercial presence in the North American hematology markets which the company plans to establish with the potential launch of Troxatyl(TM) in the second half of 2007, assuming the successful completion of the ongoing Phase II/III clinical trial for the treatment of third-line acute myelogenous leukemia and regulatory approval of Troxatyl for this initial indication in 2007.

Background on CML: Prognosis and Treatments

chronic myelogenous leukemia is a malignant cancer of the bone marrow causing rapid and abnormal growth of white blood cells. According to the National Institutes of Health, approximately 4,600 new cases of CML are diagnosed annually, accounting for 7 to 20 percent of leukemia cases. CML is associated with a chromosome abnormality called the Philadelphia chromosome. Since its approval in 2001, Gleevec has become the standard of care for Ph+ CML. Results from the IRIS study (International Randomized Interferon versus STI571), the largest clinical trial to date for newly diagnosed adult patients with Philadelphia chromosome-positive (Ph+) chronic myeloid leukemia (CML) in chronic phase, show that 90.3 percent of patients who were initially randomized to take Gleevec were still alive after 54 months.

The prevalence of CML has increased substantially because Gleevec therapy makes it possible for patients with CML to live with the disease much longer than possible with previously used treatments. Gleevec works directly on leukemic cells by inhibiting the action of BCR-ABL tyrosine kinase, the enzyme responsible for uncontrolled growth of leukemic cells. Despite this clinical success, resistance to Gleevec has emerged in a subset of patients. Once patients lose response to optimized doses of Gleevec, the only currently approved treatment is bone marrow transplantation preceded by high-dose chemotherapy and radiation, for which many CML patients are not eligible.

"We believe that a BCR-ABL inhibitor developed through this collaboration could have the potential to be used both as a monotherapy in second-line treatment of refractory or relapsed CML, and in combination with Gleevec or another agent in first-line treatment of CML," added Dr. Stephen Burley, chief scientific officer of SGX Pharmaceuticals.

About FAST(TM) Drug Discovery

FAST, short for Fragments of Active Structures, is SGX's proprietary fragment-based drug discovery platform for rapid identification of novel, potent and selective small molecule inhibitors of drug targets. FAST addresses many of the limitations of traditional approaches utilized by large pharmaceutical companies to find lead compounds, making it an attractive technology for targets that have not yielded promising leads from high-throughput screening.

FAST is based on a proprietary fragment library of approximately 1,000 structurally diverse, low molecular weight compounds. FAST integrates a series of technologies, including:

* A high-throughput capability to generate many different crystal structures of a target protein in parallel; * The evaluation of the library of fragments and direct visualization of bound fragments utilizing X-ray crystallography; and * The use of novel computational and structure-based design methods and iterative synthetic chemistry to optimize these fragments into drug candidates.

SGX believes these combined technologies generate an efficient platform for drug discovery that delivers lead compounds active against a wide range of targets, while accessing high chemical diversity and the potential for good drug-like properties.

About SGX Pharmaceuticals

SGX Pharmaceuticals is a biotechnology company focused on the discovery, development and commercialization of innovative cancer therapeutics. The Company's lead product candidate, Troxatyl(TM), is currently being evaluated in a pivotal phase II/III trial for the treatment of third-line acute myelogenous leukemia, an indication for which there is currently no approved therapy or standard of care. SGX has developed a pipeline of oncology drug candidates based on its enabling, proprietary FAST(TM) drug discovery platform, including a portfolio of next generation BCR-ABL inhibitors. FAST allows for the rapid identification of novel, potent and selective small molecule compounds for well validated but challenging targets. More information on SGX's pipeline and drug discovery platform can be found at .

SGX Pharmaceuticals Forward-Looking Statements

Statements in this press release that are not strictly historical in nature are forward-looking statements. These statements include but are not limited to statements related to SGX's research and drug discovery and development programs and statements regarding the potential value and scope of the collaboration with Novartis, SGX's receipt of potential research and milestone payments, royalty payments or profits from sales of products developed under the collaboration, SGX's co-commercialization options and commercialization strategies, expectations regarding the timing of initiation and completion of development, including clinical trials, and product launch milestones with respect to drug candidates under the collaboration, expectations with respect to the further development and potential regulatory approval of Troxatyl, the activity of BCR-ABL inhibitors, the potential of BCR-ABL-based therapies as treatments for CML alone or in combination with other treatments, the expansion of treatment options available to patients with CML, future plans and activities regarding the collaboration and SGX's BCR-ABL program, the effectiveness and efficiency of SGX's FAST technology to generate novel lead molecules for key therapeutic targets and SGX's ability to discover, develop and commercialize cancer therapeutics. These statements are only predictions based on current information and expectations and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in any of such statements due to various factors, including the risks and uncertainties inherent in drug discovery, development and commercialization, collaborations with others, and litigation. In particular, the results of early clinical trials may not be predictive of future results, and SGX cannot provide any assurances that any of its product candidates will have favorable results in future clinical trials or receive regulatory approval. In addition, SGX's results may be affected by risks that the required regulatory approvals will be received in a timely manner, or at all, risks related to the implementation of its collaboration with Novartis, competition from other biotechnology and pharmaceutical companies, its effectiveness at managing its financial resources, its ability to successfully develop and market products, the level of efforts that its collaborative partners devote to development and commercialization of its product candidates, difficulties or delays in its clinical trials, difficulties or delays in manufacturing its clinical trials materials, the scope and validity of patent protection for its products, regulatory developments involving future products and its ability to obtain additional funding to support its operations. For a discussion of these and other factors, please refer to the risk factors section of the final prospectus from SGX's initial public offering filed with the United States Securities and Exchange Commission on February 1, 2006 as well as other subsequent filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are qualified in their entirety by this cautionary statement and SGX undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof.

Source: SGX Pharmaceuticals

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