By Lisa Seachrist

Washington Editor

WASHINGTON — Genzyme Molecular Oncology (GMO), a division of Genzyme Corp., has entered into a potential $80 million research collaboration with Schering-Plough Corp. to develop cancer gene therapies combining GMO's lipid delivery system with Schering-Plough's genes.

"We are very excited to be working with Schering-Plough and that they have selected us and our lipid technology," said Gail Maderis, president of the Framingham, Mass.-based GMO. "We believe our lipid delivery system is a very valuable base technology and is a core piece of GMO's development program."

The companies will concentrate on developing a lipid delivery system for Schering-Plough's tumor suppressor gene, p53, for the first year of the collaboration, after which Schering-Plough will have the option to exclusively license the technology as it applies to p53 and five other as-yet-undisclosed cancer gene therapies. During the first year, GMO could net $7 million in up-front payments, research funding and milestone payments.

Should Schering-Plough decide to exclusively license GMO's lipid delivery system for all six genes and products subsequently developed, GMO would see total revenues, excluding royalties, in excess of $80 million.

One of the most difficult aspects of creating successful gene therapies is devising a convenient means to deliver the necessary gene to the tissues that need it. With cancer, the delivery problem is even more acute as researchers and clinicians attempt to treat the initial tumor as well as any metastases that have developed.

All previous attempts at delivering p53 to turn off tumor growth have centered on direct injection of a viral gene therapy vector into or near a tumor. Such local delivery approaches are ineffective when the tumor is inaccessible or when the cancer has metastasized.

The lipid delivery system specifically targets the gene therapy to tumors and cancer cells. As a result, the gene therapy can be given through an intravenous infusion rather than a direct injection at the tumor site.

"The real advantage of the lipid delivery system is that it selectively targets tumor cells," Maderis said. "It allows us to move from a local therapy to a systemic therapy that broadens the potential uses for gene therapy."

Maderis pointed out that the lipid technology can be applied to a wide variety of cancer genes, such as anti-angiogenic genes and apoptosis genes. GMO currently has a collaboration with StressGen Biotechnologies Corp., of Victoria, British Columbia, to use lipids to deliver stress genes as immunotherapy.

GMO is a division of Genzyme and was formed following Genzyme's acquisition of Allendale, N.J.-based PharmaGenics Inc. in February 1997. The GMO division will have its own tracking stock following completion of an initial public offering (IPO).

Last April, the division filed with the Securities and Exchange Commission a registration statement for an IPO totaling $35 million, but the offering has yet to be priced.

"We are still contemplating a public offering," Maderis said. "We wanted to finalize some of our collaborations, including Schering-Plough, before we proceeded. Now we are watching market conditions."

In addition to the lipid delivery system, GMO's technology includes serial analysis of gene expression (SAGE), a high-throughput, high-efficiency method of simultaneously measuring levels of gene expression. Using SAGE, which was developed by PharmaGenics, it is possible to determine which genes are expressed at a given time in a given cell.

GMO is using both its lipid delivery system and SAGE internally as well as licensing the technology to corporate collaborators. *

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