By Lisa Seachrist

Washington Editor

Cytogen Corp. absorbed one company and entered into a business with another to reposition itself as a leading force in prostate cancer diagnosis and treatment.

Princeton, N.J.-based Cytogen acquired Allendale, N.J.-based Prostagen Inc. to regain its exclusive proprietary rights for immunotherapy to prostate specific membrane antigen (PSMA). It then entered into a joint venture with Tarrytown, N.Y.-based Progenics Pharmaceuticals Inc. to develop PSMA technology for vaccine and antibody-based therapies for the treatment of prostate cancer.

Prostagen, a privately held company, had licensed the rights to PSMA technology to develop immunotherapies to treat prostate cancer from Cytogen in January 1997.

"We are now in the position to move directly to manifest the value of our intellectual property in developing therapies for prostate cancer, particularly immunotherapies," said H. Joseph Reiser, CEO of Cytogen. "Our joint venture allows us to maintain the marketing rights to any therapies developed."

Under the terms of the acquisition, Cytogen will pay the owners of Prostagen $2.5 million in Cytogen common stock. In addition, milestone-based payments will be paid to Prostagen owners in the future. Cytogen will receive Prostagen's existing $500,000 in cash as well as a minority ownership in NorthWest Biotherapeutics Inc., of Seattle.

Cytogen also will continue collaborations initiated by Prostagen, which include one with NorthWest Biotherapeutics for development of an ex vivo therapy using PSMA and another with Velos Inc., a software developer, to design prostate cancer disease management software. The NorthWest Biotherapeutics program should enter into Phase III clinical trials by 2000.

"The acquisition of Prostagen was fundamental in our joint venture with Progenics," Reiser said. "Their expertise in vaccines and antibodies complements nicely our know-how in PSMA."

The companies have yet to name their joint venture, but they have established the terms of the collaboration. Progenics has paid Cytogen an undisclosed licensing fee for the PSMA technology and will fund the early preclinical work. The companies will fund jointly subsequent preclinical and clinical development of any products that may arise. Cytogen will assume exclusive North American marketing rights and have the option to market outside the U.S.

PSMA is found on the membranes of all prostate cells but in an abundance on cancerous prostate cells. The joint venture will focus on developing therapeutic antibodies and vaccines that target PSMA. The antibody therapies, most likely conjugated to toxins or other therapeutic modalities, will be developed for advanced prostate cancer while the vaccines likely will target early prostate cancer.

"Our interest in Cytogen was primarily the PSMA target," said Ronald Prentki, president of Progenics. "We've been looking at this target for a long time and it seems to have potential in immunotherapies. In addition, there is some evidence that PSMA is overproduced in other cancers as well."

Reiser said the joint venture ultimately may explore PSMA's use in those other cancers, but that the collaboration first will focus on prostate cancer.

Cytogen has three approved products on the market: Quadramet for the treatment of bone pain; ProstaScint, a diagnostic for prostate cancer; and OncoScint, a diagnostic for ovarian and colorectal cancer. Last September, Cytogen shut down its subsidiary, Cellcor Inc., one month after it scrapped its joint oncology venture with Elan Corp., of Dublin, Ireland, called Targon Corp. The company then entered into a $8 million marketing deal with Berlex Laboratories, of Wayne, N.J., to market Quadramet.

Progenics is developing immunotherapies for the treatment of cancer and viral disease. Its most advanced drug candidate is GMK, a therapeutic vaccine to treat melanoma that is in Phase III studies. The company also is developing immunotherapies to combat HIV.

Cytogen's stock (NASDAQ:CYTO) gained 3 cents to close at $1.03 Wednesday. Progenics' stock (NASDAQ:PGNX) closed at $13.81, up $1.06.