MethylGene, Inc. has exercised its right to convert to a royalty and milestone arrangement with Celgene Corp. for MGCD0103 under the 2006 license and collaboration agreement between the companies.
   
MethylGene will no longer be responsible for development costs for the drug. Celgene will assume all program costs for its licensed territories. MethylGene will receive royalties in lieu of profit sharing in North America and is eligible to receive milestone payments of as much as $141 million. Celgene will also pay royalties to MethylGene on annual sales in its territories. MethylGene retains its rights under the original terms of the agreement to co-develop and co-promote subsequent compounds, including second-generation histone deacetylase (HDAC) inhibitors and sirtuin inhibitors for cancer.
   
“We believe that MGCD0103 presents a promising opportunity for the treatment of cancer. After thoughtful and careful analysis conducted with outside consultants, we have concluded that converting to a royalty at this time is financially advantageous,” said Donald F. Corcoran, president and chief executive officer of MethylGene. “Moving forward, while participating in the upside and potential of MGCD0103, we will be focusing on developing the two compounds of which we own 100%, MGCD290 and MGCD265, which are expected to enter Phase I trials by the end of this year.”