By Randall Osborne

Using genomics to enhance its search for drugs against inflammatory diseases of the gastrointestinal tract, Immunex Corp. has signed a deal with Digital Gene Technologies Inc. worth up to $93 million over the course of the five-year agreement.

"That's based on everything going right," said Douglas Williams, senior vice president of Seattle-based Immunex. "In this business, there's certainly no guarantee of that."

Immunex will use La Jolla, Calif.-based Digital Gene's system called TOGA (total gene expression analysis) to process cell line samples. The companies' goal is to identify and develop three target molecules in the course of the collaboration.

The agreement provides exclusivity for Immunex in the field of gastrointestinal inflammation. Under its terms, Immunex will pay $3.5 million up front to Digital Gene, and $3 million more over the next five years.

Additional payments will be determined by sample volume and the number of molecules identified as research candidates — potentially $6.5 million per year, or $32.5 million.

For each molecule successfully developed in the U.S. and Europe, Immunex will pay up to $18 million in milestones, plus a royalty on worldwide sales. If the goal of developing three molecules is met, milestone payments would total $54 million.

"This is a good agreement for both parties, in the sense that it shares some of the risks," Williams said. "We'd be thrilled to be paying those sorts of milestone payments."

Digital Gene retains rights to targets generated by TOGA and candidates for application outside the field of gastrointestinal inflammation. Immunex has an option to provide license fees, milestone payments and royalties for those molecules as well.

Immunex recently has had success with Enbrel, a rheumatoid arthritis drug whose active ingredient is the tumor necrosis factor receptor. In September, Wyeth-Ayerst Laboratories — a subsidiary of Madison, N.J.-based American Home Products, which owns a majority interest in Immunex — signed a $100 million agreement to promote Enbrel in North America. Immunex released positive Phase III trial data on Enbrel earlier this month. (See BioWorld Today, Sept. 29, 1997, p. 1 and BioWorld Today, Nov. 11, 1997, p. 1.)

Deal Depends On "Productive Technology"

The company plans to file a new drug application with the FDA next year, with approval possible in 1999 and the first full year of sales in 2000.

Digital Gene was started in 1995, completed an $8 million round of private financing in March 1996, and raised another $4 million this year. The potential $93 million deal with Immunex may turn out to earn even more for the company, said Robert Sutcliffe, Digital Gene's president and CEO.

"The $93 million is the number I've been using, but it's also a significant royalty deal," he said. "It's dependent on the technology being very productive."

Immunex's up-front payment is "a pretty significant number" for gastrointestinal research, though small in comparison with the potential value of the overall agreement.

"Our business model is a little different from other genomics companies," Sutcliffe said. "The sample processing is relatively modest in cost, and doesn't require a significant investment in research and development. We actually charge by the sample, and tie the rest of the dollars to results coming out of the sample."

The company's system identifies all expressed gene sequences, or mRNA molecules, that are released in cells to generate the proteins that determine cellular activities. Nucleotide sequences near the end of the mRNA are used to find the molecules, even if they previously have not been discovered. Out of these unknown, expressed sequences can come new gene discoveries. (See BioWorld Today, March 20, 1996, p. 1.)

"Forty-five days after a sample is in, you see the 6,000 to 10,000 genes that might be in a sample," said Sutcliffe. "You know what they're doing, and you know whether they're novel or not."

Digital Gene has another collaboration with Recordati Group, of Milan, Italy, to assess the activity of Recordati's calcium channel blocker, Lercanidipine, against atherosclerosis. Digital Gene received $3 million up front, and could get milestone payments and royalties.

As of Sept. 30, Immunex had $81.45 million in cash, with a net loss of $11.2 million for the nine months ending on that date. Immunex's stock (NASDAQ:IMNX) closed Tuesday at $58.031, up $0.156. *

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