By Mary Welch

Calling it a "mere blip on the radar screen," Celtrix Pharmaceuticals Inc. seemed almost relieved that Yoshitomi Pharmaceutical Industries Ltd. opted to terminate its deal to develop SomatoKine, a treatment for osteoporosis, in Japan.

Celtrix, of Santa Clara, Calif., inked the deal with Green Cross Corp., of Osaka, in 1994. Green Cross, which was purchased by Yoshitomi in April, was responsible for all the research, development and marketing of SomatoKine in Japan. (See BioWorld Today, July 6, 1994, p. 1.)

"They were to have developed preclinical data and they (Green Cross) were slow on the development schedule," said Malcolm McKay, vice president of regulatory affairs. "They were behind. We beat them on the research. We expected a lot more than we actually got from them. We got nothing. We have our own preclinical data as well as human data."

Armed with that data, Celtrix is now seeking a worldwide partner for SomatoKine and "we won't have to exclude Japan," he said.

SomatoKine is a recombinant complex of insulin-like growth factor-1 (IGF-I) and its binding protein, BP3. Preclinical studies showed it has potential as a hormone replacement therapy, stimulating formation of muscle and bone mass. In those studies, SomatoKine showed positive trends in hip bone mineral density, a strong predictor of reduced refracture risk.

Financial details of the 1994 collaboration were not released, but McKay said funding was in the "low single-digit seven figures," and that the amount outstanding was a "very low single-digit seven figure." Celtrix, of course, regains the rights to treat osteoporosis in Japan.

About 5 million people worldwide suffer from osteoporosis, with 1.5 million in the U.S. and 1.2 million in Asia. Celtrix declined to estimate how large the potential market would be in dollars, calling it "extremely speculative."

Yoshitomi cited certain development and financial aspects of the program as its reasons to end the deal. "Whenever there is a merger, there is uncertainty," said McKay. "Green Cross has a lot of experience in biotechnology, while Yoshitomi is more a conventional synthetic pharmaceutical company. They were less familiar with the scene."

Green Cross was Celtrix's only partner for SomatoKine for any indication. The drug is currently undergoing Phase II tests in Europe for severe hip fractures. The company will not enter Phase III trials until it finds a corporate partner, McKay said.

SomatoKine is also in Phase II trials for its effects on the immune systems of severely burned children. Early results on 36 children in Texas showed SomatoKine helped balance patients' immune systems, an effect that continued even after the treatment period. Phase III trials for this application should begin next year. (See BioWorld Today. May 5, 1998. p. 1.)

"We may find a corporate partner who only wants to look at SomatoKine for hip fractures. Or we may find someone who is interested in it on a broader level," McKay said. "The termination of the deal means nothing to us. It actually gives us more opportunities."

Celtrix's (NASDAQ:CTRX) stock closed Wednesday at $2.25, down $0.437. *