By Jim Shrine

Senior

PowderJect Pharmaceuticals plc is applying its needle-free delivery technology to proteins for the first time, in a $100 million deal with the Ares-Serono Group.

Separately, PowderJect completed a public offering Thursday of 8 million shares in London that grossed about $89 million.

And, in a third bit of good news for the company, its stock gained 23 percent on the day.

PowderJect, of Oxford, England, will receive $11.1 million up front from Ares-Serono, most in the form of an equity investment, and could garner another $90 million in pre-commercialization milestones on five products. The companies said those milestones will be realized within three years, if development goes as planned.

The products, in Ares-Serono's focus areas of reproductive health and immunology, were not disclosed. It is likely, however, that Ares-Serono's Gonal-F (recombinant follicle-stimulating hormone), the leading infertility drug, and Rebif (interferon beta-1a for multiple sclerosis), are being targeted.

Most of Ares-Serono's therapeutic products address chronic diseases or conditions that require repeated injections over extended periods of time. The intention is to reformulate those drugs into the dry-powdered form needed for the PowderJect System, a hand-held device that works by accelerating fine particles to supersonic speed within a helium gas jet, then delivering them to target tissues without the use of a needle.

"We believe this has the potential to offer us a significant long-term advantage," Guy Willis, Ares-Serono's senior manager of corporate communications, told BioWorld Today. "If we can offer a more convenient and painless way of injecting, it would be a huge advantage. This deal primarily, but not exclusively, addresses products that already exist in a conventional format."

The deal is the second major one for PowderJect, which signed a collaboration with London-based Glaxo-Wellcome plc worth up to $321 million in March 1998. Their focus is on using the technology to deliver DNA vaccines, with hepatitis B the first target. Last month Glaxo licensed rights on another, undisclosed product area. (See BioWorld Today, March 5, 1998, p. 1.)

"This deal [with Ares-Serono] nicely balances our portfolio," PowderJect Chairman and CEO Paul Drayson told BioWorld Today. "This is our first multi-product deal in the drug side of our business. It reflects the progress we've made in the last year in peptide and protein formulation work."

PowderJect's portfolio also includes internally developed reformulations of off-patent therapeutics and vaccines. The company's strategy is to take those products through Phase II or Phase III trials, and then partner them. The lead product, the anesthetic lidocaine, will be going into Phase III trials next month, and alprostadil for erectile dysfunction will go into Phase II next month.

In the new partnership, Ares-Serono will fund all costs related to product development. Milestones are driven by clinical progress, and a royalty rate of 6 percent to 12 percent will be paid on resulting products, Drayson said.

Willis said it will be "a complex task to reformulate drugs - especially the large molecules we're dealing with - into this fine, hard-powder format. Once we've got it reformulated, we have to establish appropriate dosing and demonstrate it works." He said the company expects to take about three years to get a drug ready to market.

Drayson said, "We've done this [formulation work] with small molecules to large proteins, to vaccines, DNA vaccines ... the technology is broadly applicable. We've built up significant expertise in protein formulation" at the company's site in Fremont, Calif.

The $11.1 million up-front payment to PowderJect includes a $10 million equity component, in which Ares-Serono, of Geneva, purchased 891,242 shares at $11.30 (685 pence) apiece. That was a premium of 20 percent to the average closing cost of the stock (LSE:PJP) for 30 days prior to Jan. 28.

The separate public offering of 8,027,696 shares came in at a per-share price of $11.055. PowderJect's stock gained about 163 pence Thursday to close at 870 pence per share. The company now has 72.4 million shares outstanding.

PowderJect has about $132 million in cash, and has been spending about $10 million per year. The cash infusion, Drayson said, will allow PowderJect to increase work on development of conventional vaccines.

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