By Charles Craig

In a deal described as potentially one of the most lucrative ever for a biotechnology company, Guilford Pharmaceuticals Inc. could receive up to $465.5 million from Amgen Inc. for rights to pills that early studies show may regenerate nerve cells to correct a variety of disorders, including Parkinson's disease and paralysis.

Guilford's stock (NASDAQ:GLFD) Thursday surged 14 percent to $28.875, a $3.625 jump. Amgen (NASDAQ:
AMGN) was up $0.187 to $52.562.

Under terms of the agreement, Amgen, of Thousand Oaks, Calif., has committed $35 million up front to Guilford, of Baltimore: $15 million in cash was paid Thursday and a $20 million equity investment will be made at the formal closing of the deal within the next month. Amgen's stock purchase includes $15 million for about 640,000 Guilford shares at $23.43 per share and $5 million for 5-year warrants to purchase another 700,000 shares at $35.15 per share, which is 150 percent of the $23.43 share price.

If the warrants are exercised Guilford would realize another $25 million from Amgen, which would own about 6 percent of its new partner. Amgen also agreed to pay Guilford $13.5 million in research funding over the next three years.

The biggest payout by Amgen, nearly $400 million, is tied to development milestones of Guilford's nerve cell regenerating compounds. If Amgen gets approval of the drugs in all 10 indications targeted in the collaboration, Guilford will get a total of $392 million, bringing the total value of the deal to $465.5 million.

Craig Smith, Guilford's chairman, president and CEO, said the milestone payments are not equal over all 10 indications. For example, in Alzheimer's and Parkinson's diseases, the milestones for each would total about $56 million.

Amgen gets worldwide rights to develop, manufacture and sell the compounds, which are small organic molecules called neuroimmunophilin ligands. The drugs are delivered orally and can pass through the hard-to-cross blood-brain barrier. Naturally occurring neurotrophic factors under development as therapeutic proteins to promote nerve cell growth have to be injected into the brain, Guilford researchers pointed out.

Guilford will receive royalties on all marketed products and the option to develop and copromote one drug in one indication.

Smith described the deal as the biggest ever for a biotechnology company. Amgen spokesman David Kaye did not dispute the characterization. (For more information on biotech-biotech deals for 1996, see the BioWorld Biotechnology State Of The Industry Report. For details on deals this year, see BioWorld Financial Watch, April 28, 1997.)

Smith said all the major pharmaceutical firms also were involved in negotiations for the compounds.

"We didn't make the final decision until [Wednesday] night," he said, adding, "It didn't go to the highest bidder."

Smith said Guilford put together a team of people, including scientists, who visited all the interested companies. "In some cases we provided them with our product to let them reproduce our findings," he said.

"We negotiated individually with companies and got their best and final offers," he added. We considered all the proposals based not just on financial terms, but on the strength of the partner." Amgen won out over nine finalists.

What the drug makers were vying for were Guilford's compounds that bind to immunophilins, which are intracellular proteins found in the brain and central nervous system. The proteins are involved in nerve cell growth, but their role is not precisely known.

However preclinical studies have shown Guilford's compounds, in binding to neuroimmunophilins, can promote nerve cell growth and protect against cell damage. The drugs also apparently don't affect healthy neurons.

Immunophilins also are found in the immune system and are the targets of the immunosuppressive drug Cyclosporin A and FK-506. The former is made by Novartis A.G., of Basel, Switzerland, and the latter by Fujisawa Pharmaceutical Co., of Osaka, Japan. By blocking immunophilins, the drugs inhibit T cell growth to help prevent donor organ rejection by the transplant recipient's immune system.

Guilford's neuroimmunophilin binding compounds target the nerve cell activity of the proteins, not their immune system activity.

The company's animal studies have demonstrated the effectiveness of one compound, called GPI-1046, in promoting cell regeneration to correct damage caused by Parkinson's disease and peripheral nerve injuries. (See BioWorld Today, March 10, 1997, p. 1.)

Smith said Guilford has another "half-dozen or more" compounds that are clinical candidates.

The 10 targeted indications in the Amgen collaboration include seven neurological conditions. In addition to Alzheimer's and Parkinson's diseases, they are multiple sclerosis, peripheral neuropathies, brain damage caused by head injuries and strokes and paralysis caused by spinal cord injuries.

The other three indications, described as non-neurological applications, were not disclosed.

Kaye said the Guilford compounds will fit well with Amgen's portfolio of neurological drugs, including glial-derived neurotrophic factor, a protein in clinical trials for Parkinson's disease and amyotrophic lateral sclerosis (ALS).

Another Amgen neurological drug, brain-derived neurotrophic factor (BDNF), which was under development with Regeneron Pharmaceutical Inc., of Tarrytown, N.Y., for ALS, failed in Phase III trials in January 1997.

Kaye did not say how soon Amgen would begin clinical studies with a Guilford compound and in what indication, but noted Parkinson's disease may be an initial target.

Amgen is the biotechnology industry's leading money-making company. It ended the second quarter of 1997 with a six-month net profit of $381 million and $1.225 billion in cash. *