By Jim Shrine

Alkermes Inc. and Genentech Inc. expanded their collaboration to develop Nutropin Depot in an arrangement that could be worth an additional $75 million to Alkermes.

The companies have been collaborating on the sustained-release delivery of Genentech¿s human growth hormone product since 1995, and the filing of a new drug application (NDA) is said to be near. The collaboration expansion includes the purchase by Genentech of $35 million of convertible, exchangeable preferred Alkermes stock, and potential milestones of $40 million.

Genentech spokesman Paul Laland said the new collaboration will expand development activities, including trials in an additional indication; pay for scale-up of the manufacturing process to accommodate potential additional demand; and fund continued formulation development and dosing regimens to build on the success of Nutropin Depot.

Nutropin Depot combines Alkermes¿ ProLease delivery vehicle with Genentech¿s human growth hormone in a product designed to allow monthly, rather than daily, injections to treat short children deficient in the hormone. Phase III data, released in October, showed Nutropin Depot was safe, tolerable and effective. Laland said Thursday an NDA filing was ¿imminent.¿ (See BioWorld Today, Oct. 23, 1998, p. 1.)

The $35 million in stock comes with a conversion price of $45 per share, a significant premium to recent trading prices on Alkermes (NASDAQ:ALKS), which closed Thursday at $29.562, up 43.75 cents.

Alkermes has the option to redeem the $35 million preferred stock in cash or stock at any time.

Alkermes officials were not available for comment.

Laland said payments from the milestone part of the deal will begin no sooner than early 2001. He said there is a potential second-generation Nutropin Depot product being considered, and any additional indication has not been decided upon.

¿The expanded collaboration will build upon our leader position in the injectable sustained-release delivery of growth hormone, and build upon our productive collaboration with Alkermes,¿ Laland said. ¿We have been very pleased.¿

The ProLease delivery vehicle is a polymeric microsphere, similar to dissolving sutures. Separately, Alkermes has a collaboration with Johnson & Johnson, of New Brunswick, N.J., focused on ProLease delivery of erythropoietin. They have completed safety studies.

In other Genentech news Thursday, it agreed to continue its collaboration with Xoma Ltd., of Berkeley, Calif., on development of the hu1124 monoclonal antibody product through Phase III trials. The product, an anti-CD11a antibody, has completed Phase II studies as a treatment for moderate to severe plaque psoriasis.

Phase II study results in 145 patients showed statistically significant clinical improvement as measured by physician¿s global assessment scores, and in improvement of condition. Full details will be presented at a dermatology meeting in Canada, June 30 through July 4.

Under terms of the new agreement, Xoma and Genentech will share future development costs and profits on a 25-to-75 basis, respectively. Genentech will fund Xoma¿s share of development costs through long-term convertible loans.

Genentech already has provided convertible loans of $23.5 million and purchased $9 million in Xoma stock since the collaboration began in 1996.

Xoma¿s stock (NASDAQ:XOMA) gained 3 cents Thursday, to close at $3. Genentech (NYSE:GNE) fell $2.06, to close at $84.56.