By Mary Welch

Staff Writer

Genentech Inc. and Inspire Pharmaceuticals Inc. signed a deal worth up to $78 million to develop therapeutics for three respiratory disorders, including cystic fibrosis.

"It's a defining event for the company," said Inspire's chief business officer, Greg Mossinghoff. "Genentech has been very aggressive lately in acquiring great technology and we're happy to join their bandwagon and be part of that story."

The deal calls for South San Francisco-based Genentech to pay $10 million up front ($5 million cash, $5 million in equity) and then milestone payments up to a possible FDA approval. Inspire also will receive royalties on net sales. "We do have the option to co-develop and co-promote the cystic fibrosis indication, but as it goes closer to market, Genentech rightly will take the lead," Mossinghoff said.

"It's a great deal for both Inspire and Genentech," said Thomas Dietz, director of research for Pacific Growth Equities Inc. in San Francisco. "It's a phenomenal deal for a small company like Inspire. It's a sweetheart deal and its first one of a worldwide scale. Inspire has two Japanese partners for that region. This is Inspire's largest deal and will allow it to redirect some of its resources so it can move forward quicker with some of its other programs. This deal will allow Inspire to deepen and broaden its pipeline."

The companies will focus their efforts on three indications: cystic fibrosis, chronic bronchitis and sinusitis bronchitis.

Inspire, of Durham, N.C., will take the lead in the development of cystic fibrosis indication by selecting a small molecule and bringing it into the clinic by mid-2000. The company will be in charge of that program's development through the end of the Phase II trials.

The private company will take its lead compound, INS365, into Phase IIa trials in the first quarter of next year for chronic bronchitis. The company has already completed Phase I with that compound. Upon completion of the Phase IIa study, Genentech will proceed with the rest of the clinical development, Mossinghoff said.

Inspire expects to enter the clinic with a yet-to-be-selected small molecule sometime next year for sinusitis bronchitis, he said.

Inspire's products target members of the P2Y receptor family. INS365 stimulates mucociliary clearance by activating the P2Y₂ receptor. The receptor is located on the apical surface of specialized cells within the respiratory tract.

Inspire and partner Kissei Pharmaceutical Co. Ltd., of Matsumoto City, Japan, are developing INS365 for the Japanese market for chronic obstructive pulmonary diseases, including chronic bronchitis. Kissei recently filed an investigational new drug application for INS365 in Japan. The compound is also in trials for dry-eye disease. For that indication, Inspire is partnered with Santen Pharmaceutical Co. Ltd., of Osaka, Japan. (See BioWorld Today, Sept. 15, 1998, p. 1; and Jan. 4, 1999, p. 1.)

"We have dozens of molecules to choose from for both the cystic fibrosis and sinusitis bronchitis indications," Mossinghoff said. "We have an idea of what might be selected."

"It looks like they intend to move quickly in clinical development," Dietz said. "It's also is a good deal for Genentech because it gives them the opportunity to potentially broaden its pulmonary and cystic fibrosis reach."

Genentech's cystic fibrosis drug, Pulmozyme, was approved in 1993 and its label has been broadened a few times since. The drug is designed to cut up and through thickened mucous secretions produced by the inherited lung disorder. Pulmozyme had third-quarter 1999 sales of $27 million, compared to $24.7 million for the same period last year. In May, Genentech signed a deal with Aradigm Corp., of Hayward, Calif., to develop a pulmonary delivery system for Pulmozyme. (See BioWorld Today, May 27, 1999, p. 1.)

In the past several days, Genentech said it had started a Phase III trial of its anti-CD11a (hu1124) product for moderate to severe plaque psoriasis and will enter Phase III trials with its recombinant humanized monoclonal antibody to vascular endothelial growth factor (rhuMAb-VEGF) in combination with chemotherapy in metastatic colorectal cancer and metastatic non-small cell lung cancer. The company also said it had preliminary positive results from Phase III asthma efficacy studies for its anti-IgE9 (rhuMAb-E25) product. (See BioWorld Today, Dec. 21, 1999, p. 1; Dec. 17, 1999, p. 1; and Dec. 20, 1999, p. 1.)

Genentech's stock (NYSE:DNA) closed Tuesday at $132.75, up $8.75.