Vasogen plans to submit a premarket approval application in 2003 for its immune modulation therapy (IMT) for peripheral arterial disease (PAD).

An ongoing, randomized, double-blinded, pivotal clinical trial for the PAD indication will enroll up to 500 patients over the next 12 months at medical centers throughout the U.S. and Canada, according to the company.

Vasogen estimates an applicable U.S. patient population of about 7 mil., resulting in a potential $100 mil. market niche for the therapy out of an estimated $8 bil. spent on PAD annually in the U.S.

IMT incorporates a device to treat blood cells so that they induce the body to decrease systematic inflammation. The 20-minute outpatient procedure can be performed by a nurse or lab technician, according to Vasogen.

After drawing a small sample of a patient's blood, the cells are "stressed" and then re-administered, Vasogen explains. Immune system cells, including macrophages and dendritic cells, are triggered by the stressed blood cells to produce regulatory cytokines. This leads to a relative reduction in the level of pro-inflammatory cells. The process of modulating the levels of both anti-inflammatory and pro-inflammatory cytokines leads to a decrease in systematic inflammation.

Beyond the PAD indication, Vasogen also is conducting feasibility studies for other potential IMT applications including those for congestive heart failure, psoriasis, ischemia/reperfusion injury, chronic lymphocytic leukemia and graft-versus-host disease. The firm plans to release data from the congestive heart failure and psoriasis trials in the first quarter of 2002.

Preclinical studies for rheumatoid arthritis and neurological diseases such as multiple sclerosis also are underway.

Vasogen plans to leverage IMT through a joint U.S. commercialization pact with Quest Diagnostics, announced Nov. 7. Under terms of the deal, laboratory services firm Quest will make an initial $7.5 mil. equity investment in Vasogen. In exchange, Quest will receive a share in revenues and exclusive distribution rights for cardiovascular and autoimmune indications in the U.S. For other indications, Vasogen remains free to pursue additional marketing partners. The firm is currently in discussions with partners for pharmaceutical applications.

Additional Quest milestone payments to Vasogen are tied to FDA approval markers. The size of the payments will be based on the market value of the indications approved by the agency. The firm expects its first milestone from Quest in early 2004, following approval of the PAD indication.

Revenue-sharing percentages under the deal "would provide Vasogen with a share of revenues equal to its partner," Vasogen President and CEO David Elsley explained during a Nov. 7 webcast. The arrangement with Quest is Vasogen's first strategic alliance.

Vasogen plans to deliver the IMT through Quest's infrastructure of 1,300 delivery points, all of which may begin offering the therapy. About 80 mil. samples are collected from the roughly 30 mil. patients who visit Quest's labs each year.

Vasogen cites Quest's geographic reach and familiarity with physician referrals as the major selling points leading up to the partnership. Experience with blood handling and knowledge of the laboratory reimbursement environment also attracted Vasogen to Quest in the U.S.

In Europe, Vasogen says it will be less likely to find a single partner with scope as far-reaching as Quest's. In Japan and Canada, however, market structure may allow for a single-partner alliance, according to Vasogen. The firm is in active discussions with foreign partners in all three regions. IMT is regulated as a medical device throughout the world.

Toronto-based Vasogen, which has cash of about $25 mil. and no revenues, had a loss of $2.2 mil. for the third quarter (ended Aug. 31) compared to a loss of $1.4 mil. for the comparable quarter last year.

Vasogen predicts that existing funds will be sufficient to carry the firm to its expected 2004 milestone payment from Quest.

Teterboro, New Jersey-based Quest's net income for the third quarter increased 70% to $50.1 mil. on revenues of $903 mil., up 6.2%.

Vasogen Sees 2003 PMA For Vascular Disease Immune Modulation Therapy

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