By Randall Osborne

Impressed by the potential of Alteon Inc.'s treatment for diabetic kidney disease, Genentech Inc. has signed development and marketing agreements with the Ramsey, N.J., company worth up to $200 million, excluding royalties.

The drug is pimagedine, an inhibitor of advanced glycostatin end products (AGE), formed when glucose binds to proteins in the blood and causes them to stiffen. As cells, tissues and blood vessels harden, the kidneys and other organs can be damaged.

Alteon is conducting pivotal Phase III trials of pimagedine, after Phase II data showed strong positive results. (See BioWorld Today, April 18, 1997, p. 1, and BioWorld Today, Aug. 1, 1997, p. 1.)

Under the terms of the deal, South San Francisco-based Genentech will make an initial equity investment of $15 million in Alteon, through a combination of common and preferred stock. Genentech will fund development costs for pimagedine with an investment of up to $48 million in Alteon convertible preferred stock, payable as an initial $16 million cash investment in January 1998, with more investments to follow.

The pact further provides that Alteon receive milestones of up to $50 million, related to regulatory filings and approvals in the U.S. and Europe, plus royalties on sales of the marketed product.

Second-generation drugs -- which may be selected from Alteon's portfolio of other AGE formation inhibitors -- are also exclusively licensed to Genentech, with Alteon to receive up to $50 million in milestones related to filings and approvals.

The deal really pertains to two drugs, said Kenneth Moch, senior vice president of finance and business for Alteon. Developing the second-generation drugs will cost an estimated $40 million, and Genentech will pick up that cost, said Moch, who is also Alteon's chief financial officer.

Three pivotal Phase III trials are ongoing for pimagedine. Two trials are studying 1,200 patients with progressive kidney disease at 100 U.S. sites. These are called ACTION (A Clinical Trial in Overt Neuropathy) studies, and they have retinopathy as their secondary endpoint. Retinopathy is the excessive buildup of blood vessels in the retina, which is a leading cause of blindness among diabetics.

"[Patients] have an eye scan at the time of enrollment and at certain key points," Moch said. If the secondary-endpoint results are good enough for the FDA, "We may be able to get discussion of retinopathy data for the package insert" upon approval of pimagedine for kidney disease, he said. A third trial is studying patients with end-stage renal disease.

The ACTION I trial, in Type I diabetics, is scheduled to be unblinded in August 1998. "If we're lucky, we could receive milestones in 18 months or sooner," Moch said.

Alteon also is investigating potential indications of the drug for inflammatory conditions, and is developing another group of drugs called AGE cross-breakers. While an AGE inhibitor such as pimagedine binds to the protein-glucose complex and blocks it from becoming harmful, the cross-breakers are "more like scissors," Moch said. "They actually break AGE structures that were previously formed, potentially reversing the pathology."

An investigational new drug application probably will be filed for the lead cross-breaker product, called ALT-711, in the first half of next year, Moch said.

He said Alteon began shopping for a new collaborator even before Hoechst Marion Roussel, a subsidiary of Frankfurt, Germany-based Hoechst AG, scrapped their partnership in June 1996. (See BioWorld Today, June 11, 1996, p. 1.)

"We knew they were evaluating our portfolio, and we thought it was appropriate to begin discussions," Moch said. Hoechst has been "a fabulous ex-partner," he added. "They still hold about 5 percent of the company's stock." Alteon has 17 million shares outstanding.

In September, Alteon signed a deal with Ganes Chemicals Inc., of Carlstadt, N.J., for commercial-scale production of pimagedine, which Moch said he expects will become a broad-spectrum agent, useful against a wide variety of diseases.

The AGE acronym associated with the drug is no accident, he said. "The mechanism of AGE formation is, we believe, a fundamental process of aging," Moch said. "Diabetes is, from a pathology standpoint, a process of accelerated aging."

Pimagedine may be no fountain of youth, but to Genentech it looks like a revenue source worth tapping. Kathleen Rinehart, spokeswoman for the company, said the deal with Alteon is part of Genentech's overall plan and its commitment to therapeutic endocrinology.

"Part of our strategy is to license in late-stage products that we think have great opportunity and significant market value," she said, noting Genentech's partnership with San Diego-based IDEC Pharmaceuticals Corp. to develop Rituxan, the recently approved monoclonal antibody against cancer. (See BioWorld Today, Dec. 1, 1997, p. 1.)

In the face of sliding third-quarter sales figures for its leading thrombolytic and hormone products, Genentech devised a methodology for boosting revenues and loading up its developmental pipeline. (See BioWorld Today, October 15, 1997, p. 1.)

The approval of Rituxan will help, and pimagedine may, too. Nick Simon, vice president of business development for Genentech, said the pimagedine deal is "of similar magnitude" to the collaboration on Rituxan. "There are a lot of comparisons with the IDEC deal," he said.

As of Sept. 30, Alteon had $20.3 million in cash, with a net loss of $20.6 million for the first nine months of 1997. Alteon's stock (NASDAQ:ALTN) closed Thursday at $8, up $1.438, an almost 22 percent jump. Genentech's shares (NYSE:GNE) closed at $56.687, down $0.188. *

No Comments