By Lisa Seachrist

Washington Editor

Genentech Inc. and Actelion Ltd. signed a $75 million co-promotion deal for Actelion's heart failure drug, tezosentan.

Genentech will pay Allschwil, Switzerland-based Actelion licensing fees and milestone payments for the U.S. rights to co-market tezosentan. Genentech will take the lead on the marketing activities while Actelion is responsible for the development of the drug, which is in Phase III clinical development.

"From our perspective, we are excited about this collaboration because tezosentan is a novel therapy that is in line with the strategic direction of our cardiovascular focus area," said Betsy Rosenberg, media spokeswoman for South San Francisco-based Genentech. "This may be the first therapy of its kind to reach the market."

Under the terms of the agreement, Genentech will pay privately held Actelion $15 million in up-front licensing fees. Genentech also will provide up to $75 million in milestone payments, a convertible loan and an equity investment in Actelion's upcoming initial public offering. Actelion expects to complete its initial public offering in April.

Actelion's sales force will also co-promote Genentech's single bolus thrombolytic drug, TNKase (Tenecteplase), which is pending FDA approval. Genentech filed a biologics license application for the product in July 1999.

"We are providing a convertible loan to fund Actelion's co-promotion activities," Rosenberg said. "There are a lot of marketing synergies between the two companies, which make this arrangement attractive."

Acute heart failure results when the heart can't pump adequate amounts of blood, resulting in poor cardiac output. It is the No. 1 cause of hospitalization in the elderly. More than 1.5 million patients are hospitalized each year for acute heart failure in the U.S. No new drugs have been registered for this indication in a decade.

Tezosentan is an endothelin receptor antagonist that acts by blocking endothelin receptors. Endothelin is a naturally occurring protein that causes blood vessels to constrict. In heart failure, it is believed this constriction may lead to a decrease in cardiac output. By blocking the receptors, tezosentan prevents the constriction of blood vessel.

Phase II studies of the drug demonstrated its ability to improve measures of cardiac output.

Genentech's stock (NYSE:DNA) closed Tuesday at $166.75, up $2.75.