By Jim Shrine

Special To BioWorld Today

Hoping to capture part of the $1 billion-plus market now held by Amgen Inc., Transkaryotic Therapies Inc. (TKT) and Hoechst Marion Roussel Inc. said Tuesday they began Phase III studies of their gene-activated erythropoietin (EPO) product.

Known as GA-EPO, the product will be tested for both anemia related to renal failure in dialysis patients and in pre-dialysis patients. The pivotal study, designed to support approval for intravenous and subcutaneous administration, is expected to last about one year.

The start of the Phase III trial triggered a $2.5 million payment from Hoechst, bringing TKT's revenues from the 1994 collaboration to $26 million. The balance of the $57 million deal would be paid mostly on approvals in the U.S., Europe and Japan, each worth about $8 million to $10 million, said Daniel Geffken, TKT's vice president and chief financial officer.

Launching the major study suggests Hoechst and TKT are confident in their position in an ongoing patent suit over EPO filed by Amgen, of Thousand Oaks, Calif., in April 1997. The case was administratively closed in April 1998 but could be reopened later. (See BioWorld Today, April 17, 1998, p. 1.)

Hoechst, of Frankfurt, Germany, is responsible for all development, clinical work and commercialization. TKT would get royalties "in the low double digits," Geffken said.

TKT officials did not want to discuss specifics of the trial design. But Thomas Dietz, an analyst at Pacific Growth Equities Inc. in San Francisco, said Tuesday's news was significant on many fronts.

"The fact they got the Phase III trial going is interesting in itself," Dietz said. "But, more importantly, it's clear they are going after the dialysis and pre-dialysis marketplace all in one shot. They are going after a much larger population of patients than we had originally anticipated."

Dietz said the studies likely will include more than 1,000 patients, rather than the 150 or so that were expected, and will include a surprising look at different available routes of administration. "They are going not only for a trial designed to get regulatory approval, but trials to have a significant amount of commercial appeal as well," he said.

The EPO market for all uses in the U.S. now is about $1.7 billion, with about half in dialysis patients and 25 percent each in non-dialysis patients and chemotherapy uses. The trial design, Dietz said, shows Hoechst and TKT are going for a broader labeling and one that would allow for quicker and deeper market penetration.

Dietz, like most analysts covering TKT, believes the company will prevail in its patent litigation with Amgen. Dennis Harp, an analyst with BT Alex. Brown Inc., in New York, however, expects GA-EPO to be blocked in the U.S. but reach the European market. He agreed that the broader clinical program expands the potential of the product, which he believes could reach the European market in 2001.

Hoechst could have played it safer, Dietz said, by running a small trial, enabling a testing of the waters of the patent dispute for only $5 million or $10 million. "But Hoechst just committed $50 million to $100 million to run large trials," he said. "That's a vote of extreme confidence that they are going to get to market quickly with a broad labeling and have an impact from a commercialization standpoint. They are going to have a product that addresses all the questions."

GA-EPO is TKT's lead product, and one of two from its gene-activation platform partnered with Hoechst. The other collaboration, on an undisclosed protein, was begun in 1995. The cell line for that protein was accepted into development in June 1997, and is being developed by Hoechst. TKT has received $30.5 million to date from that potential $67 million collaboration, Geffken said.

The company has six other gene activation products in the pipeline, and two other technology platforms — gene therapy and niche proteins. No other products are partnered and the company, with $120 million in cash as of June 30, is in a position to enter other collaborations for strategic advantage rather than out of necessity, Geffken said.

In early clinical studies, the company has a gene therapy product for hemophilia A and, in the protein area, one for Fabry's disease, a genetic disorder cased by deficiency of the alpha-galactosidase enzyme. TKT has six other proteins in various stages of development.

TKT's stock (NASDAQ:TKTX) closed Tuesday at $27, down $1.125. *

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