Regeneron Pharmaceuticals Inc. on Tuesday said it hassigned a $40 million contract with Merck & Co. Inc., toproduce an intermediate product for Merck's PedvaxHIB, a pediatric vaccine that prevents hemophilusinfluenza Type B (HIB) infections.

Regeneron Vice President Murray Goldberg said heexpects the contract will extend over eight years andreimburse Regeneron for "certain capital expenditures aswell as the product itself."

Regeneron, of Tarrytown, N.Y., also manufactures brain-derived neurotrophic factor (BDNF) under an agreementwith Sumitomo Pharmaceuticals Company Ltd., which istesting BDNF for use in Japan for amyotrophic lateralsclerosis (ALS), also know as Lou Gehrig's disease.

The agreement is a "positive step for Regeneron to cut itsburn rate," said Mike King, an analyst with Dillon, Read& Co. Inc., New York. "The company has excess capacityat its manufacturing site that can now be developed underthe agreement," King told BioWorld Today.

As of June 30, 1995, Regeneron had $50 million in cash,enough to last less than two years. The company's stock(NASDAQ:REGN) closed Tuesday at $15.69, up nearly$2 on the news.

Regeneron's new relationship with Whitehouse Station,N.J.- based Merck is a natural because the firm's CEO, P.Roy Vagelos, is Merck's former chairman and CEO.When Vagelos joined Regeneron in January, thecompany's stock shot up 70 percent.

Regeneron has several drugs in clinical trials, includingtwo developed under a partnership with Thousand Oaks,Calif.-based Amgen Inc. Favorable results in a Phase I/IItrial of BDNF led to a pivotal Phase III trial among ALSpatients that recently began enrolling patients, saidGoldberg. Amgen and Regeneron also are studyingneurotrophin-3 in a Phase I trial in patients withperipheral neuropathy. Data from that study are nowbeing analyzed, Goldberg said.

The latest cash infusion means that Regeneron may beginto recover from its announcement last year that it wasdiscontinuing development of ciliary neurotrophic factorfor ALS, news that sent the company's stock down 33percent and resulted in a 25 percent reduction in thecompany's work force.

Vagelos, who joined Regeneron in January, subsequentlyannounced it was broadening its research focus to includeresearch in therapies for cancer, inflammation and muscledisorders. (See BioWorld Today, July 11, 1995, p. 1.) n

-- Michele L. Robinson Washington Editor

(c) 1997 American Health Consultants. All rights reserved.