By Randall Osborne

In return for undisclosed payments and 10 percent equity in Transgene Inc., a French gene delivery company, Human Genome Sciences Inc. (HGS) agreed to offer Transgene up to 10 genes during the decade-long term of the deal.

As an initial license fee and research funding, Transgene will pay an amount equal to proceeds it gets from HGS' equity purchase, and the deal will be complete after Transgene's initial public offering (IPO), which is expected to price later this month, said William Haseltine, chairman and CEO of Rockville, Md.-based HGS.

"They expect to go public at $150 million to $200 million valuation or higher," Haseltine said of Transgene, based in Strasbourg, France. At the lower amount, the 10 percent equity deal would be worth $15 million up front to HGS.

"I think it may represent a new trend in transcontinental biotech deals," Haseltine added. "It's always been the case that we've worked with large biopharmaceutical companies, but now American and European technology have begun to link up."

More payments to HGS will depend on the number of genes licensed by Transgene, Haseltine said, and HGS is in line for "hefty" development milestone payments.

Haseltine said the areas of focus for the gene therapy work are hematopoiesis (formation of the blood in the body), inflammation and autoimmunity, tissue repair and regeneration, and cancer.

HGS, in its fourth gene therapy deal, gets rights to sell any developed products in North America, and Transgene will have those rights in Europe. "We'll share the rest of the world jointly," Haseltine said.

Royalties will be paid by Transgene to HGS. On comarketed products, HGS and Transgene will pay reciprocal royalties.

Transgene uses adenoviral vectors for gene delivery, and has developed vaccinia viral, retroviral, cellular and a range of synthetic vectors. Internal research focuses on cancer, cystic fibrosis, muscular dystrophy and cardiovascular diseases. Several products have reached or exceeded Phase I trials in Europe.

The French company made its first deal last month, a collaboration worth more than $88 million with Madison, N.J.-based Schering-Plough Corp. (See BioWorld Today, Feb. 5, 1998, p. 1.)

"They're getting to be a hot company," Haseltine said.

In its IPO, Transgene plans to offer 1.125 million ordinary shares, in the form of American Depositary Shares (ADSs) valued at between $12.50 and $14.50 each, or between $37.50 and $43.50 per share. Each ADS represents right to one-third of a share of stock.

At the lower price, the IPO would raise in the range of $42 million to $49 million.

Transgene granted an overallotment of 168,750 shares to the offering's underwriters: Lehman Brothers and Credit Suisse First Boston, both of New York; and BancAmerica Robertson Stephens, of San Francisco.

HGS' stock (NASDAQ:HGSI) closed Monday at $42.50, unchanged. *