Citius buys out license to Ontak replacement from Dr. Reddy's for $40M

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Citius will acquire the exclusive license from Dr. Reddy's to E7777, which is already approved in Japan. (Getty/Natee Meepian)

Citius Pharmaceuticals is paying $40 million to acquire the license to a phase 3 asset meant to replace Ontak, the FDA-approved cancer drug that was withdrawn from the market in 2014 due to manufacturing issues. 

Japanese pharma Eisai withdrew Ontak from the market in 2014 due to production issues related to bacterial expression and purification challenges. Eisai gained the FDA nod for the treatment in 2008. 

In an effort to fix the manufacturing issues, an improved and more pure version of Ontak was discovered. Dr. Reddy's paid an undisclosed amount for the rights to that therapy outside of Japan and Asia in 2016. 

Now, Citius will acquire the exclusive license from Dr. Reddy's to E7777, which is already approved in Japan. Citius gains the rights to develop and commercialize the therapy in all markets aside from Japan and certain regions of Asia, the company said Tuesday.

E7777 is being studied in a global phase 3 clinical trial in patients with cutaneous T-cell lymphoma, or CTCL, a form of non-Hodgkin lymphoma. Under the terms of the deal, Eisai will complete the trial as well as chemistry, manufacturing and control responsibilities through to an FDA regulatory filing, slated to occur by the end of 2022. 

RELATED: India's Dr. Reddy's gets chunk of oncology candidate E7777 rights from Eisai

Japan's drug regulator approved E7777 for CTCL and peripheral T-cell lymphoma, or PTCL, an aggressive and uncommon non-Hodgkin lymphoma, in March, and Eisai launched it in May. That approval was based on a phase 2 study in Japan that showed a response rate of 31.6% in patients with CTCL and 41.2% in PTCL. 

The Cranford, New Jersey-based biotech will pay $40 million upfront to Dr. Reddy's and could dish out another $40 million in biobucks related to regulatory approvals in the U.S. and other countries. Dr. Reddy's stands the chance of gaining another $70 million if the drug lands multiple indications. Citius will pay Eisai $6 million if the drug is approved plus additional commercial milestones. 

E7777 gained orphan-drug designations from the FDA for PTCL in 2011 and CTCL in 2013.