Eight months after Avigen Inc. decided to stop funding its adeno-associated virus technology, it found a buyer in Genzyme Corp.

Cambridge, Mass.-based Genzyme has made a $12 million up-front cash payment to Avigen and would make milestone and royalty payments in exchange for assets that include a broad patent estate, a Phase I/II program in Parkinson's disease and a clinical collaboration in hemophilia.

"We're excited. This is a nice opportunity for us as a company to expand our gene therapy estate and to acquire some really interesting programs," said Rich Gregory, Genzyme's head of research.

While companies such as Avigen are pulling out of the gene therapy space, Genzyme is building its portfolio. Just last month, it acquired South San Francisco-based Cell Genesys Inc.'s manufacturing operation in San Diego for $3.2 million to support the growth of its gene-therapy programs. Genzyme has worked on gene therapy since the early 1990s when the science first emerged. But other players bowed out when faced with difficulty enrolling patients and following news that gene therapy using adenoviral and retroviral vectors resulted, respectively, in the 1999 death of a teenager and the 2003 emergence of a leukemia-like condition in two children.

Some companies, such as Seattle-based Targeted Genetics Corp., have forged ahead, bringing products through clinical studies only to have them fail at the later stage. In March, Targeted Genetics dropped development of tgAAVCF after it missed its primary endpoint in a Phase IIb cystic fibrosis trial.

But Genzyme believes in the promise of gene therapy.

"The technology, at least in our hands in preclinical studies, is doing what we believe it needs to do for us to transfer it into patients," Gregory told BioWorld Today.

Genzyme, as an established company, can afford to research an unproven area. Founded in 1981, it has annual revenues that exceed $2 billion and it has more than 8,000 employees worldwide with more than 25 marketed products.

"We don't rely on gene therapy for our company's success," said Gregory, explaining why Genzyme remains committed to the field. "It is relatively significant but a minor component of our R&D effort [and could eventually] supersede other current modes of therapy. It could be a big part of our future."

As for Alameda, Calif.-based Avigen, gene therapy will be only a memory, as it has chosen to focus on more traditional drug development, including its preclinical small-molecule programs in neuropathic pain. The company announced its plans to stop funding AAV gene therapy in April. (See BioWorld Today, April 6, 2005.)

As a result of shifting its technology to Genzyme, Avigen has shut down its AAV manufacturing facility, reducing its operating costs by more than $2 million annually. It also has sublet pieces of lab, warehouse and office space, as well as all GMP space, saving it an additional $5 million through the term of its lease.

The sale to Genzyme of the assets provides Avigen with capital to fund its more traditional programs, which include its lead drug, AV411, and AV333, both to treat neuropathic pain, as well as AV513 for hemophilia A and B.

With the acquisition, Genzyme will now hold Avigen's 40 U.S. patents and 29 foreign patents covering AAV technologies, its manufacture, delivery and treatment of several diseases. It also gains responsibility for a Phase I/II trial of AV201 in Parkinson's disease, which began in December 2004, at the University of California at San Francisco and Lawrence Berkeley National Laboratory. Three patients have been treated in the 15-patient trial. AV201 is designed to restore the therapeutic effectiveness of the primary treatment for Parkinson's - levodopa - by enhancing the brain's ability to convert it into dopamine.

Gregory could not say exactly when the trial might be complete, but he would like to see it done in 2007.

"Our desire would be to accelerate the timeline, but that will require a lot of work," he said.

In the meantime, Genzyme will continue an Avigen collaboration with Katharine High, an expert in hemophilia gene therapy research, at the University of Pennsylvania School of Medicine. The program entered the clinic a few years ago, but Avigen discontinued the seven-patient Phase I study of Coagulin-B when two patients experienced mild elevations in liver enzymes, leaving no therapeutic window. Coagulin-B used AAV to deliver Factor IX, the missing or deficient protein that causes hemophilia B.

In the trial, Avigen "didn't get the duration of gene expression that they wanted," Gregory said. "They went back to the lab."

The program is scheduled to re-enter the clinic in early 2006.

Before acquiring Avigen's assets, Genzyme had its own gene therapy programs in development, including a Phase II cardiovascular product. The trial is evaluating the safety and effectiveness of locally delivered Ad2/HIF-1alpha, an engineered form of the HIF-1alpha gene, in promoting the growth of new blood vessels and improving circulation in the limbs of patients with peripheral arterial disease. That product uses an adenovirus vector.

At the preclinical stage, Genzyme is working on a program that uses AAV for lysosomal storage disorders. Gregory hopes to see it move into the clinic in a year or two.

Genzyme also is conducting preclinical gene therapy research in partnership with Baltimore-based Excigen Inc., and with Applied Genetic Technologies Corp., of Alachua, Fla.

Genzyme's stock (NASDAQ:GENZ) rose $2.46 Wednesday, to close at $73.18, while Avigen's stock (NASDAQ:AVGN) rose 6 cents to close at $3.01