By Mary Welch

Inhale Therapeutics Inc. entered a $25 million agreement to apply its pulmonary delivery system to Biogen Inc.¿s multiple-sclerosis drug, Avonex (interferon beta-1a).

¿This gives us a program with a leading drug ¿ in fact, one of the leading drugs to come out of any biotechnology company,¿ said Robert Chess, co-CEO of San Carlos, Calif.-based Inhale, which will develop the product based on its deep-lung delivery system for macromolecules. Avonex, which chalked up $395 million in sales last year, is the world¿s leading therapy for multiple sclerosis.

The Inhale system, about the size of a flashlight, disperses a dose of dry powder into a small standing cloud within a clear chamber. It delivers the dose through the mouth and directly into the lungs, where it enters the blood system

Biogen, of Cambridge, Mass., and Inhale hope ¿more people will use [Avonex] earlier,¿ with the non-injection delivery system, which also will make taking the drug easier for those already using it, Chess told BioWorld Today.

Inhale Therapeutics has six drugs in human clinical trials using its delivery system. The most advanced is for the systemic delivery of insulin, which is starting Phase III trials for Type I and Type II diabetes, as part of a deal with Pfizer Inc., of New York. Under the terms of the Biogen agreement, Inhale will receive an undisclosed up-front signing fee, royalties on product sales, and up to $25 million in research and development funding, along with potential milestone payments.

Biogen will provide bulk Avonex to Inhale for formulation into a room-temperature-stable dry powder. Inhale will manufacture and package the dry powder and supply inhalation devices. Biogen will be responsible for clinical trials, marketing and commercialization.

Clinical Trials Likely In 2000

Chess said Inhale will take this year to perfect the formulation, and will most likely start clinical trials next year. Avonex, which has powered Biogen¿s earnings since the drug was launched in 1996, is currently used by more than 55,000 multiple-sclerosis patients worldwide ¿ an increase of 60 percent over 1997. Total Avonex sales for 1998 reached $349.9 million, a gain of 65 percent over the previous year. Biogen believes more than 100,000 patients will be using the product in a few years.

Avonex¿s market share in the U.S. is 2-to-1 over other multiple-sclerosis drugs, and it¿s the leading product in Europe and other markets.

News of the agreement was disclosed after the market closed Wednesday. Inhale¿s stock (NASDAQ:INHL) closed at $28.625, up $0.875. Biogen¿s shares (NASDAQ:BGEN) ended the day at $90.375, down $1.625. n