By Lisa Seachrist

Washington Editor

Pfizer Inc. initiated large-scale clinical studies testing droloxifene as a treatment for osteoporosis. The move puts Ligand Pharmaceuticals Inc. closer to collecting royalties from sales of drugs developed in collaboration with Pfizer.

In addition, Ligand, of San Diego, announced that Pfizer, of New York, has a second potential osteoporosis drug, CP336, developed out of the collaboration, which is in Phase I clinical trials that are expected to be completed this month. And Phase III studies of droloxifene as a treatment for breast cancer are also on track, with Pfizer expecting to file a new drug application for this indication in 1998.

"These products represent our first collaboration which is just now coming to fruition," said Susan Atkins, Ligand's vice president of corporate communications. "We think we are moving ahead nicely."

Pfizer and Ligand entered into an agreement to use Ligand's intracellular receptor technology to identify drug candidates for the treatment of osteoporosis in 1991. In 1993, the research phase of the collaboration ended with Ligand providing a lead compound, CP336, and a back-up compound that is not yet in development.

However, with the development of droloxifene -- a compound that Ligand had worked on -- the collaborators ended up in a dispute over milestone and potential royalties because Pfizer was developing the drug for use in the treatment of breast cancer. That dispute was settled in 1996 with Pfizer making a $350,000 milestone payment to Ligand and agreeing to make another $900,000 milestone payment once Pfizer initiates Phase III clinical studies of the drug for osteoporosis.

The studies that Pfizer reported to Ligand have been described as "advanced, randomized, double-blind, placebo-controlled clinical trials." However, it is unclear whether these trials are Phase II, Phase II/III or Phase III trials.

"We are in discussions with Pfizer to determine if these studies trigger the $900,000 milestone," Atkins said, adding that the payment would be received in Ligand stock owned by Pfizer and valued at $12.375 per share.

Once droloxifene is approved for breast cancer, Ligand will receive a 1 percent royalty on its sales. Should the drug be approved for use in osteoporosis, that royalty payment will jump to 3 percent. Should CP336 gain marketing approval, Ligand will receive 6 percent in royalties.

Droloxifene and CP336 are selective modulators of the estrogen receptor. Like estrogen itself, the drugs stimulate the production of bone and provide cardioprotective effects; however, unlike estrogen, neither compound stimulates the breast tissue or uterine proliferation that has been linked to an increased risk of cancer.

"Ligand's technology is so powerful that it allows us to identify drugs with greater tissue specificity and accuracy," Atkins said.

Ligand also is using its technology to investigate possible osteoporosis drugs in a collaboration with Wyeth-Ayerst Laboratories, of Radnor, Pa., a subsidiary of American Home Products Corp., of Madison, N.J.

In addition, Atkins noted Ligand's specialized pharmaceutical venture with Allergan Inc., of Irvine, Calif., Allergan Ligand Retinoid Therapeutics Inc. (ALRT), of San Diego, is on track developing retinoids for the treatment of cancerous and precancerous conditions.

Atkins said ALRT's lead product, oral Panretin (9-cis-retinoic acid), has shown significant activity in Kaposi's sarcoma, psoriasis, and myelodysplastic syndrome.

The National Cancer Institute, in Bethesda, Md., also is investigating the compound as a potential treatment for breast cancer, ovarian cancer, prostate cancer, acute promyelocytic leukemia, a variety of pediatric malignancies and bronchial metaplasia (a premalignant lung condition). *