Alfacell Corporation and US Pharmacia announced that Alfacell has entered into a distribution agreement with USP Pharma Spolka ZOO (USP Pharma), an affiliate of US Pharmacia, for the commercialisation of Onconase (ranpirnase), Alfacell's lead drug candidate, in Eastern Europe. Onconase is currently being evaluated as a treatment for unresectable malignant mesothelioma (UMM) in a confirmatory phase IIIb registration study.

Under the distribution agreement, Alfacell has granted USP Pharma exclusive rights for the marketing, sales and distribution of Onconase in Poland, Belarus, Ukraine, Estonia, Latvia and Lithuania for an initial term that extends for 10 years after the first commercial sale in the territory. Additionally, Alfacell and US Pharmacia have entered into a securities purchase agreement pursuant to which US Pharmacia has purchased 533,360 shares of Alfacell's common stock at a price of $2.53 per share. Upon execution of the agreements, Alfacell received total cash payments of $1.5 million, consisting of $100,000 as an up-front signing fee under the distribution agreement and $1.4 million for the purchase of Alfacell common stock under the securities purchase agreement. Alfacell will also be entitled to receive milestone payments based on the achievement of certain regulatory approvals and certain sales goals. In addition, Alfacell will receive a transfer price for product sold as well as a significant double-digit royalty rate on net sales.

Alfacell will be responsible for making regulatory filings with and seeking marketing approval from the European Medicines Agency (EMEA) and the manufacturing and supplying of product. USP Pharma will be responsible for all commercial activities and related costs in the territory.

"We are pleased to announce our second commercial partnership," said Kuslima Shogen, chairman and chief executive officer of Alfacell. "Poland plays an important role in our phase IIIb clinical programme. The agreement with USP Pharma represents the establishment of a key relationship in Poland and the rest of the territory designated under this agreement, where the incidence and prevalence of UMM and other cancers continues to rise, and a significant unmet treatment need exists. With its extensive market knowledge, established commercial capabilities, growing commitment to oncology and successful track record, USP Pharma is the ideal partner to maximize the marketing potential of Onconase in this territory."

Katarzyna Kusmierz, chairman of US Pharmacia, said, "We are excited about the opportunity to be part of the team that brings Onconase to the world. Onconase represents a promising new treatment for UMM, a disease for which there is only one currently approved therapy worldwide. Onconase also has significant potential in other cancer indications. As such, we believe Onconase should be well-received in our markets."

Shogen added, "Moving forward, Alfacell will continue the dialogue about Onconase with potential partners in the United States and other key markets. We remain committed to the transformation of Alfacell into a more fully integrated company with research, clinical and commercial dimensions."

Onconase is a first-in-class product candidate based on Alfacell's proprietary ribonuclease (RNase) technology. A natural protein isolated from the leopard frog, ONCONASE has been shown in the laboratory and clinic to target cancer cells while sparing normal cells. ONCONASE triggers apoptosis, the natural death of cells, via multiple molecular mechanisms of action in a manner similar to RNA interference (RNAi).