By Lisa Seachrist

Washington Editor

IDEC Pharmaceuticals Corp. signed a $47.4 million deal with Schering AG granting the Berlin-based pharmaceutical company exclusive marketing and distribution rights outside the U.S. for Zevalin, a radiolabeled non-Hodgkin's lymphoma (NHL) therapy.

The San Diego-based company will retain marketing rights in the U.S., where it co-markets its non-radiolabeled NHL therapy Rituxan with marketing partner Genentech Inc. IDEC gets a $13 million up-front payment.

"This is a very good deal and the up-front payment is a little higher than you would expect," said William Rohn, chief operating officer at IDEC. "But, we are delivering to them a drug that is in pivotal Phase III trials and we will also be delivering to them an FDA dossier which will allow them to go for European approval without much trouble. So, the value is there."

Under the terms of the agreement, in addition to the up-front payment, Schering committed $15 million in funding for the development of Zevalin, formerly called IDEC-Y2B8. Another $19.5 million could come in milestone payments. IDEC will receive royalty payments from foreign sales of Zevalin.

Peter Ginsberg, senior research analyst with U.S. Bancorp Piper Jaffray in Minneapolis, estimated that royalty to be in the mid-teens.

Zevalin is being developed by IDEC as a therapy for low grade and/or follicular NHL. It's a mouse monoclonal antibody targeted against the CD20 antigen found on normal mature B cells and cancerous B cells conjugated to a yttrium-90 radioisotope. The therapy consists of a treatment with IDEC's Rituxan, a non-radiolabeled chimeric antibody against CD20, to mop up circulating B cells followed by a treatment with Zevalin to penetrate into the lymphatic system to knock out cancerous cells.

Zevalin is in two pivotal Phase III clinical trials - a 150-patient trial comparing it to Rituxan and a 50-patient trial assessing it in patients who previously have been treated with Rituxan. The company expects the trials to be completed in mid-2000, with an FDA filing in mid-2001.

With Zevalin, Schering is moving into the lead position in therapies for NHL. Currently, the company markets Fludara (fludarabine), a chemotherapy agent approved for use in chronic lymphocytic leukemia but gaining acceptance off-label for treating NHL. In addition to Zevalin, Schering AG has a marketing/development deal with Techniclone Corp., of Tustin, Calif., for Oncolym, a radiolabeled murine monoclonal antibody targeted against a different antigen, for use in treating intermediate and high-grade NHL.

"Zevalin is a natural portfolio extension for them," Rohn said. "We see them as a very good partner for us in both Europe and Asia."

Should Zevalin be approved, it very likely would be in head-to-head competition with Coulter Pharmaceuticals Inc.'s Bexxar, a murine monoclonal antibody against CD20 conjugated to radioactive iodine, for which a filing for approval with the FDA is expected soon. Rohn believes Zevalin would win that battle.

"We do feel that we will be better dressed," Rohn said. "Yttrium 90 is a pure beta emitter. Iodine 131 gives off both gamma and beta radiation, which means that people around that patient will receive radiation exposure for a certain period of time. Zevalin will likely be more convenient."

In October 1997, South San Francisco-based Genentech, IDEC's Rituxan marketing partner, returned Zevalin rights to IDEC.

IDEC's stock (NASDAQ:IDPH) closed at $56.25 per share Thursday, down $2.312.