By Randall Osborne

West Coast Editor

Grafting its tolerance induction program and inbred miniature swine technology onto Novartis Pharma AG's immune-suppression expertise and work with transgenic pigs, BioTransplant Inc. said the two firms are forming a joint venture to advance xenotransplant research.

"Novartis has committed $30 million for three years to support the research of the new company," said Elliot Lebowitz, CEO of Charlestown, Mass.-based BioTransplant. "It's not 'up to $30 million,' it's $30 million."

The new company, owned 67 percent by Novartis, of Basel, Switzerland, and 33 percent by BioTransplant, begins operating Jan. 1 in Boston, with Julia Greenstein, BioTransplant's chief scientific officer, as CEO.

Greenstein said both companies are "basically putting in whatever technology they have access to that's applicable."

Under the terms of the deal, Novartis keeps rights to commercialize products, and will pay royalties to BioTransplant, which will keep its allotransplantation program going separately. A xenotransplant is the transfer of cells, tissue or an organ from one species to another, while an allotransplant is the transfer within the same species.

Imutran Ltd., a wholly owned subsidiary of Novartis, also will become a part of the joint venture.

The subsidiary, Greenstein said, "has the complement-inhibiting transgenic pig technology, and any material that Novartis is either commercially producing or producing for research that the [joint venture] wants to try out, we have access to. Novartis has novel immunosuppressive drugs, as well as monoclonal antibodies, and molecules that could be useful in hematologic mismatches."

Lebowitz, who will become a board member of the joint venture, called it "the first time [such technology] has been packaged together, with management focus purely on xenotransplantation." The venture also lets BioTransplant focus exclusively on its AlloMune products for allotransplants, and continue its efforts in a partnership with MedImmune Inc., of Gaithersburg, Md.

"Some 'strategies' are luck," Lebowitz said of the deal, which has been in the works for a year. "This one was conscious."

For refractory lymphoma, the AlloMune system, which BioTransplant says attacks diseased cells more aggressively than the patient's own defense mechanisms, is expected to enter a Phase II trial early next year. In kidney transplants, the AlloMune system allows the use of mismatched kidneys without the use of immunosuppressive drugs and involves mixing bone marrow from the patient and a donor to create chimeric bone marrow.

One of the compounds being developed with MedImmune, MEDI-507, is in three Phase I/II trials for psoriasis, and a large Phase II trial is expected to begin within a year. MEDI-507 functions by binding to the CD2 antigen receptor on T cells and natural killer cells, suppressing their immune response.

BioTransplant's stock (NASDAQ:BTRN) closed Tuesday at $13.562, up 6 cents.

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