By Mary Welch

Agouron Pharmaceuticals Inc. agreed to pay up to $40 million to Shionogi & Co. Ltd. to develop and commercialize S-1153, a second-generation non-nucleoside reverse transcriptase inhibitor (NNRTI) for treating HIV.

S-1153 was discovered by Osaka, Japan-based Shionogi and is in several Phase I studies to evaluate dosage and concurrent use with other antiretrovial treatments.

"We think this is the future to treating the HIV disease," said Joy Schmitt, associate director of corporate communications for Agouron. "More drugs need to be developed that will be sensitive to drug-resistant viruses and S-1153 looks particularly promising.

"HIV is becoming resistant to other drugs in this class and S-1153 has been shown to be effective — fully active — particularly against these viruses, including the K103N mutation, which is the most common genetic mutation associated with resistance to other NNRTIs."

Schmitt said S-1153 is more potent in vitro than other NNRTIs such as nevirapine (Viramune) and delavirdine (Rescriptor). Viramune is marketed by Boehringer Ingelheim GmbH of Ingelheim, Germany; Rescriptor by Pharmacia & Upjohn of Kalamazoo, Mich.

The plan is to take S-1153 into Phase II trials during the next quarter.

Under the agreement with Shionogi, Agouron will have exclusive rights to development and commercialization in North America, Europe and several other territories, Shionogi will keep commercial rights in Japan, Korea and Taiwan.

Shionogi will receive an initial $10 million licensing fee from the La Jolla, Calif.-based Agouron, with additional licensing fees reaching as high as $40 million. Agouron also will pay Shionogi royalties based on S-1153 sales.

"It's $10 million up front but we don't even consider $40 million a high price based on our marketing data," Schmitt said. "When you consider that we expect Viracept to reach $350 to $360 million in sales this (fiscal) year and that S-1153 could reach that size as well, it would be a good return on our investment."

Agouron's 1998 fiscal year ends today.

The company's lead product is Viracept, an HIV protease inhibitor for treatment of adults and children. Viracept has the largest sales of any of the four protease inhibitors on the market and is second to Crixivan in number of prescriptions.

In addition to Crixivan, made by Merck & Co. Inc., of Whitehouse Station, N.Y., the other approved protease inhibitors are Norvir, marketed by Abbott Laboratories of Abbott Park, Ill., and Fortovase, made by Roche Holding Ltd. of Basel, Switzerland.

Vertex Pharmaceuticals Inc., of Cambridge, Mass., is in Phase III trials with amprenavir, an HIV protease inhibitor. That drug is partnered with Glaxo Wellcome plc, of London, and Kissei Pharmaceutical Co. Ltd., of Matsumoto, Japan,

After a little more than one year on the market, Viracept can be called "the most successful launch of a biotechnology drug ever," said Schmitt. "And one of the top 10 launches in the pharmaceutical industry."

Viracept is generally used with reverse transcriptase inhibitors, such has AZT and 3TC — both of which are sold by Glaxo — and possibly in the future with S-1153. Protease inhibitors attack HIV replication near the end of the cycle while reverse transcriptase inhibitors interfere near the beginning.

Agouron's stock (NASDAQ:AGPH) closed Monday at $33.375, down $0.75. *