By Frances Bishopp

NeoRx Corp. has entered into an agreement worth up to $60 million with Schwarz Pharma AG, covering NeoRx's Biostent product, a combination drug/device for the treatment of restenosis following balloon angioplasty.

Under the terms of the agreement, NeoRx retains manufacturing rights on a worldwide basis.

Biostent, which has completed Phase I trials, is the first locally delivered therapeutic agent to undergo clinical evaluation in the U.S. for the inhibition of restenosis.

Depending on progress with product development, NeoRx can receive up to $30 million in license fees and milestone payments, while Schwarz Pharma's direct funding of future development is estimated at an additional $30 million.

NeoRx also will receive fees based on future sales and profits from manufacturing the product.

NeoRx granted Schwarz Pharma, of Monheim, Germany, marketing rights for North America and Europe and Schwarz Pharma will fund the future development of the product. NeoRx, of Seattle, will retain marketing rights for territories outside North America and Europe.

The initial payment of $8 million, of which $4 million will be for the purchase of equity at a 50-percent premium, will be paid to NeoRx following Schwarz Pharma's successful review of Phase I results.

Biostent is delivered immediately following angioplasty through a specially developed delivery catheter designed to provide accurate drug doses to the angioplasty site and eliminate any toxicity that might occur with systemic delivery. The active Biostent agent, cytochalasin B, minimizes muscle constriction and stabilizes the artery wall in its dilated condition.

Cytochalasin B is a fungal metabolite that functions by inhibiting the cytoskeletal system. NeoRx manufactures pharmaceutical-grade cytochalasin B in its pilot manufacturing facility.

Biostent is an alternate therapy to metal stents, Brad Ogura, manager of investor relations at NeoRx, explained to BioWorld Today. After angioplasty, where the artery is ballooned, stretched and somewhat traumatized, approximately 30 percent of patients' arteries, as a reaction to this trauma, will renarrow about three to six months following angioplasty, he said. It is at this point that metal stents (short lengths of metal caging) are often placed into the artery to maintain artery flow.

Although the metal stents may keep arteries open longer, their use can be limited by size and location of the artery, and stents are still subject to restenosis as a result of smooth muscle accumulation around the metal framework of the stent.

Animal studies have shown, Ogura said, that application of Biostent, coupled with the artery wall's natural secretion of collagen after angioplasty, sustains the dilation of treated arteries. Biostent keeps the artery in a dilated condition until a collagen matrix is formed. When the collagen matrix is formed, instead of forming in the constricted artery, it forms in the dilated artery, Ogura said.

Biostent is designed to prevent vascular remodeling, and since the patients who will develop restenosis cannot be predetermined, the Biostent product is designed to be administered prophylactically to all angioplasty patients.

Biostent's safety profile from the interim analysis of the Phase I trial supports this use.

In February, 1997, NeoRx reported interim data from 38 of the 43 patients in the Phase I clinical trial for Biostent. The results demonstrated the Biostent agent can be safely administered at all dose levels.

The remaining five patients will have completed their six-month follow-up in April 1997, after which they will be added to the data base. There was no product-related acute toxicity in those patients.

Phase II trials, to be overseen by a clinical development team set up by NeoRx and Schwarz Pharma, are expected to enroll approximately 400 patients. Ogura said no date has been set at this point to begin the Phase II trials.

Another product in development for NeoRx is Avicidin, a cancer therapy product. Verluma, a monoclonal antibody-based diagnostic imaging agent developed by NeoRx, is marketed by the radiopharmaceuticals division of The Dupont Merk Pharmaceutical Co., of North Billerica, Mass.

NeoRx's cash on hand, as of Dec. 31, 1996, was $18.3 million. NeoRx's stock (NASDAQ:NERX) closed Tuesday at $5.437, down $0.500. *