By Debbie Strickland

Pharmacia & Upjohn (P&U) wrote a $12 million check to Genentech Inc. for worldwide rights to recombinant thrombopoietin, with another $23 million in licensing payments to come over the next three years.

In addition, South San Francisco-based Genentech will receive a final transfer payment and royalties, both in undisclosed amounts, if the product is successfully commercialized. Thrombopoietin (TPO), a platelet generator, currently is undergoing Phase II clinical trials for the treatment of thrombocytopenia associated with cancer chemotherapy.

The two companies will codevelop the product, with Genentech conducting trials in the field of myeloablative therapy and London-based P&U handling testing for all other indications. The big pharma firm will assume development expenses going forward, with the exception of process development costs related to Genentech's manufacture of the product.

The deal is a "good move" for Genentech, said analyst Mark Simon, managing director for BancAmerica Robertson Stephens & Co., in San Francisco. "Genentech felt the amount of money it would take to get the product all the way through the FDA and to educate the oncology community was significant. It had other priorities with higher returns [on which] resources could be better spent."

Just three years ago, observers pegged the potential market for recombinant TPO products at more than $1 billion, based in part on the markets created by erythropoietin (which boosts red blood cells) and granulocyte colony stimulating factor (which does the same for white blood cells).

The possibilities attracted not only Genentech, but Amgen Inc., of Thousand Oaks, Calif., which licensed a TPO product developed at ZymoGenetics, a subsidiary of Denmark-based Novo Nordisk A/S.

Since then, analysts have scaled back TPO market projections to about $200 million annually.

"Unfortunately, raising platelet [counts] was not as straightforward as was thought," said Simon, "due to the complexities surrounding how platelets are formed and how they mature."

Moreover, even though "it's very clear the product raises platelets, the question is . . . how clinically important is TPO in the oncology setting? Since many chemotherapy regimens are designed to minimize thrombocytopenia, there are some questions as to how large the market for TPO will be."

The good news about TPO is that it's a "fairly low-risk product," Simon said, and likely to win FDA approval.

Preliminary Phase I/II data published last May demonstrated an increase in platelet counts ranging from 61 percent to 213 percent in adult sarcoma patients, accompanied by a dose-related increase in bone marrow megakaryocytes (precursors of platelets) of up to four-fold.

Amgen's version of TPO, megakaryocyte growth and development factor, is also in Phase II trials. The company reported last fall that a low-dose injection of the factor increased platelet counts by 1.76-fold to 2.36-fold, which held for a "prolonged duration" with no adverse events recorded.

Genentech's shares (NYSE:GNE) closed Thursday at $60, down $0.25. *

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