By Kim Coghill

Washington Editor

Schering-Plough has received FDA approval of PEG-Intron for injection as a once-weekly treatment for chronic hepatitis C, according to its licensing partner, Enzon Inc., of Piscataway, N.J.

PEG-Intron (peginterferon alfa-2b) can be administered to patients 18 and older who have not been treated with alpha interferon and who have compensated liver disease. Peg-Intron, a longer-acting form of Schering-Plough's Intron A that uses pegylation, or PEG, technology developed by Enzon, will be on the market in early February.

FDA approval triggers Enzon's final $2 million milestone payment, said Kenneth Zuerblis, Enzon's chief financial officer. The company already has received $4 million in milestone payments and is receiving royalties based on sales in Europe, where it already is approved, and on U.S. sales. Zuerblis would not elaborate on royalties except to say Schering-Plough's worldwide sales of Intron A and Rebetron combination therapy for 1999 were $1.1 billion.

PEG-Intron is expected to cost about $10,000 annually per U.S. patient and Enzon will receive 7.5 percent royalties there, according to a prepared statement by Mark Augustine, biotechnology analyst with U.S. Bancorp Piper Jaffray. An estimated 4 million Americans are infected with the hepatitis C virus.

Enzon's stock (NASDAQ:ENZN) closed Monday at $59.734, up $5.359, or 10 percent. Madison, N.J.-based Schering-Plough's stock (NASDAQ:SGP) closed at $52.312, down 6 cents.

Zuerblis said PEG-Intron is an improvement over Intron A, which is typically used in conjunction with ribavirin (Rebetol) for the treatment of hepatitis C. "That is the gold standard of treatment for hepatitis C, with about 90 percent of the market," Zuerblis said. "We've taken the Intron component and made it twice as good. This will be a once-a-week injection as opposed to three times a week and in the clinical trials we were able to double the efficacy of alpha interferon."

Safety and efficacy of PEG-Intron has been proved in a randomized, controlled clinical study of 1,219 adult patients with chronic hepatitis C who were not previously treated with alpha interferon. The study compared PEG-Intron administered subcutaneously once weekly to Schering-Plough's Intron A (interferon alfa-2b, recombinant) injection administered subcutaneously three times weekly. Patients were treated for 48 weeks and were followed 24 weeks post-treatment.

Nearly all study patients experienced one or more adverse events, the most common being flu-like symptoms, Enzon said in a prepared statement.

Intron A is a recombinant version of naturally occurring alpha interferon, which has been shown to exert both antiviral and immunomodulatory effects.

Introduction of PEG-Intron for the treatment of hepatitis C will not force Intron A and ribavirin off the shelves, Zuerblis said. In addition to being used with ribavirin, Intron A also is used alone for the treatment of hepatitis C and numerous cancers. Schering-Plough has filed a supplemental new drug application to sell ribavirin separately from Rebetron. The expectation is that PEG-Intron and ribavirin will be the gold standard of hepatitis C treatment in the future.

Other than PEG-Intron, Enzon also has two other approved products, Oncaspar for acute lymphoblastic leukemia, and Adagen for severe combined immunodeficiency disease (SCID), commonly known as the "Bubble Boy Disease."

Schering-Plough also has PEG-Intron in Phase III clinical trials for malignant melanoma and chronic myelogenous leukemia, and the product is in earlier-stage trials for solid tumors and leukemias.