A deal to supply its delivery technology as part of a drug development program could be worth up to $34 million for Emisphere Technologies Inc.

The Tarrytown, N.Y.-based company entered a licensing agreement with Novartis Pharma AG to develop an oral formulation of recombinant human growth hormone (rhGH). The companies formed the partnership following preclinical feasibility studies for rhGH with Emisphere's eligen technology in which it identified delivery agents that can deliver therapeutically sufficient levels of orally administered rhGH to the bloodstream.

"We have had an existing collaboration with Novartis for a number of years to work on an oral form of calcitonin," Lewis Bender, Emisphere's senior vice president of business development, told BioWorld Today. "This is a second deal with Novartis, and we believe that it's certainly confirmation that Novartis believes our technology is worthy of further investment."

Indeed, the delivery method was validated in a prior setting as Emisphere previously worked with Eli Lilly and Co. on developing an oral rhGH formulated with eligen. Bender said growth hormone, a large protein, has a molecular weight about four to five times that of many other peptides, but that partnership established that it can be delivered orally with eligen. The oral rhGH formulation is produced through a non-covalent interaction that is hydrophilic and hydrophobic.

Despite the proof-of-concept success, Indianapolis-based Lilly backed out of the partnership about a year ago as part of a broader effort to pare down products in its pipeline. That breakup ended a six-year arrangement on rhGH, for which all rights were returned to Emisphere, though both companies continued an oral parathyroid hormone 1-34 program that also uses the eligen technology. (See BioWorld Today, Feb. 28, 1997, and Aug. 13, 2003.)

Soon after, Novartis entered the picture. The Basel, Switzerland-based company funded studies to further validate the concept, and eventually came to terms on a license. Conditions of the agreement call for Novartis to pay Emisphere up to $34 million during the course of product development, and a royalty increasing to double-digit rates based on sales. Including the initial payment, Emisphere could receive up to $6 million over the next year.

The partners will work to begin clinical trials of oral rhGH that employs the eligen technology, with Emisphere playing a supportive role in advance of human studies. Novartis will fully fund the program going forward, including all clinical studies. It did not disclose a specific indication.

As Bender mentioned, the collaboration marks the second between the companies. More than four years ago, Emisphere agreed to apply its technology to calcitonin, a peptide that on its own cannot effectively be delivered orally. The osteoporosis product has advanced to Phase IIa studies, with plans for further progress under the management of Novartis. (See BioWorld Today, Feb. 18, 2000.)

Outside of its partnerships, Emisphere also is using its technology to develop internal programs. An oral heparin product completed a Phase III study, but the company had to reformulate the liquid form into a solid dose before advancing it. Emisphere plans to get the reformulated product into another Phase III study, but first must present plans to the FDA. Another clinical-stage program is focused on an oral insulin product, which has been evaluated in Type I and II diabetics.

On Thursday, Emisphere's shares (NASDAQ:EMIS) gained 8 cents to close at $3.62.

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