National Editor

Neose Technologies Inc. and Novo Nordisk A/S turned their 2002 research and development pact into two formal licensing agreements that give Neose $4.3 million up front and could bring it up to $51.3 million in milestone payments.

"For those who were looking for a validating transaction, this is clearly one," said Robert Kriebel, senior vice president and chief financial officer for Horsham, Pa.-based Neose.

Neose's stock (NASDAQ:NTEC) moved up 83 cents Tuesday, or 11.3 percent, to close at $8.19.

The deals call for Neose to apply its GlycoPEGylation technology to develop three next-generation proteins within Novo's therapeutic areas, one protein of which is currently marketed.

Under the terms, Novo, of Bagsvaerd, Denmark, is responsible for funding Neose's R&D activities, and Neose gets royalties on sales of any products commercialized. Neose could get more milestone payments and royalties on new indications for the two proteins not currently marketed by Novo.

GlycoPEGylation extends and customizes protein half-life by linking various sized polyethylene glycol (PEG) polymers to glycans remote from the protein's active site, thereby preserving activity.

Two of three proteins Novo markets are glycosylated: NovoSeven (Factor VII) for controlling bleeding in hemophiliacs, which sold $464 million last year; and Norditropin, which is human growth hormone for the long-term treatment of children who have growth failure due to inadequate secretion of endogenous growth hormone. That product sold $247 million in 2002.

The "currently marketed" protein could be either of those. Neose isn't saying which, nor is the company identifying the other two proteins involved. Among the possibilities, both in Phase II, are Novo's Liraglutide, a GLP-1 analogue for Type II diabetes, and an inactivated form of NovoSeven known as Active Site Inhibited Seven for acute respiratory distress syndrome - along with, possibly, some product candidate in development that the company has not disclosed.

The 2002 deal with Novo let both companies monitor the success of Neose's methods, Kriebel said, and now "we've been able to allow somebody else who is an expert in the field to develop these three compounds, which will allow us to focus on what we do best."

Neose has other deals. In August, the company entered an agreement with Sandoz in which Neose will use its technologies with an undisclosed therapeutic recombinant protein that is manufactured and supplied by Sandoz, a unit of Novartis AG, of Basel, Switzerland. If both parties elect to proceed with further development and commercialization, they would have co-exclusive worldwide rights. More recently, the company signed a similar deal involving an undisclosed protein with Rentschler Biotechnologie GmbH & Co. KG, of Laupheim, Germany.

"They are where Novo was a year ago," Kriebel told BioWorld Today.

Neose has work under way in-house, too. At the first of this year, the company said it was developing an improved version of the red-blood-cell stimulator erythropoietin (EPO) as its first proprietary drug development project using GlycoPEGylation. The company said it will conduct various preclinical development activities during 2003 and the first half of 2004, aiming to submit an investigational new drug application during the third quarter of 2004.

In October 2003, Neose said its second project was an improved granulocyte colony-stimulating factor (GCSF) as the target for its second proprietary drug development project. GCSF stimulates white blood cells, and is approved in major markets worldwide for neutropenia associated with chemotherapy. The company's plans include preclinical development activities during 2003 and 2004 and submitting an investigational new drug application in mid-2005.