By Matthew Willett

Wrapping up a $60 million deal last week was anything but the end of the alliance between Regeneron Pharmaceuticals Inc. and Procter & Gamble Co.

A $17 million investment ending a 1997 deal between the companies was completed, but a new alliance worth about $64 million in guaranteed payments was immediately struck, extending P&G's obligation for research funding through 2005 but restricting funding to research in areas of particular interest to P&G.

Regeneron, of Tarrytown, N.Y., completed the sale of 573,630 shares of stock to P&G at $29.75 per share for a total of about $17 million, as the companies announced in June. P&G also acquired 938,875 shares in a cashless transaction by exercising 1.45 million warrants.

Procter & Gamble, of Cincinnati, now owns about 6.7 million shares of the company, or 18 percent, after the $17 million investment and the warrant exchange.

In addition, P&G has paid Regeneron two payments totaling $3.5 million for undisclosed milestones.

Murray Goldberg, vice president of finance and administration and chief financial officer at Regeneron, said the new alliance will yield about $10 million more for Regeneron than the original agreement, which was signed in late 1996 and was to go through 2002.

"All that money goes to fund joint research," Goldberg said. "We're focusing that research now on areas that are of particular interest to Procter and Gamble: muscle atrophy and muscular disease, fibrotic diseases and certain G protein-coupled receptors."

Goldberg said P&G will retain rights to some early, research-stage programs, but Regeneron will keep the rights to all other projects.

Among the programs Regeneron keeps are three product candidates: Axokine, a ciliary neurotropic factor; VEGF Trap, an antagonist to vascular endothelial growth factor; and BDNF, or brain-derived neurotrophic factor.

"We're pleased they've decided to continue to do joint research and extend our collaboration," Goldberg said. "It's been a fruitful collaboration thus far, and led to a progression in many research areas with potential applications in a wide variety of areas."

Goldberg said Regeneron hopes to bring its VEGF Trap to clinical trials early next year. It is a potential treatment for cancer. The company's BDNF, in collaboration with Amgen Inc., is in Phase III clinical trials for amyotrophic lateral sclerosis, and enrollment was completed in July for a Phase II dose-ranging trial for Axokine in indications for obesity.

Regeneron's stock (NASDAQ:REGN) closed Friday at $29.375, up 43.7 cents.

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