By Matthew Willett

Making therapeutics just got easier for protein and peptide leader Human Genome Sciences Inc., thanks to the fusion protein technology the Rockville, Md.-based company gets through its acquisition of Principia Pharmaceuticals.

HGS said Monday it acquired the Norristown, Pa., company in a stock swap worth $120 million, a price based on a 20-day average of HGS' share price. Principia thus became a wholly owned subsidiary of the aspiring big-pharma company that just last week filed a universal shelf registration with the SEC worth as much as $1 billion.

That registration's stated purpose was acquisition, and CEO and Chairman William Haseltine said the grab for a "mature technology" isn't likely to be the last from HGS.

"The acquisition helps us and is clearly in the area of our strategic focus of building into a pharmaceutical company that discovers, develops, manufactures and sells protein-based drugs, and this fits into a chain of acquisitions we've made over the last year," he said.

Principia's albumin-fusing technology holds the promise of solving a number of problems in peptide and protein-therapeutic manufacture and treatment, including commercial-scale manufacturing difficulties and dosing issues caused by the inherent in vivo instability of protein therapeutics.

At 40 grams per liter, albumin is one of the most abundant proteins in human serum, and the inefficiency of replacing the protein carrier gives it a long circulation life in the bloodstream. Fusing it with therapeutic proteins or peptides could increase manufacturing cost efficiency by improving the compound's stability and thus lowering dosage requirements.

"First and foremost," Haseltine said, "our primary motivation is the improved delivery and pharmacogenics of the albumin protein. One of the consistent problems of protein drugs is the short half-life and the amounts needed, the dosage needed, but we believe this technology has the potential to allow us to create protein drugs [with most of our proteins and peptides]."

Haseltine added that the albumin-fusion technology could have partnership implications for second-generation formulations of currently marketed drugs. Projects centered on other important therapeutics, including interleuken-2, interferon alpha and human growth hormone, were already in the works for Principia scientists prior to the HGS acquisition of the company.

Haseltine cited HGS partnerships with Abgenix Inc., of Fremont, Calif., to develop human antibody therapeutics and diagnostics; Dyax Corp., of Cambridge, Mass., to develop human peptide and antibody therapeutics and diagnostics; and Cambridge Antibody Technology Ltd., of Melbourn, UK, to develop human antibody therapeutics and diagnostics as forerunners to the Principia acquisition.

Proof of principle for the albumin-fusion technique is already well tested, Haseltine said, calling the technology "thoroughly validated."

"There's very substantial proof of principle over many years by Principia scientists," he said.

Industry watchers are optimistic as well about the acquisition, citing this move and other factors in recommending HGS stock.

Human Genome Sciences shares (NASDAQ:HGSI) closed Monday at $155, down $9.45.

Principia spun off from Aventis Behring LLC subsidiary Delta Bioltechnology Ltd. in July 1999, taking with it exclusive rights to the albumin fusion proteins and the yeast strains used to produce the proteins.

Haseltine said the spin-off was part of a process of paring down and focusing by Aventis, which focuses on small- molecule therapeutics, vaccines and blood products. He added that his company will be on the lookout for similar situations.

"I think this may not be the last of this kind of deal that we're going to do. HGS could acquire mature technology in the future from large pharmaceutical companies that are paring down and focusing," he said.

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