By Frances Bishopp

Alza Corp. has purchased 4.9 percent of U.S. Bioscience Inc. for approximately $21.5 million through the sale of 1.18 common shares of U.S. Bioscience stock at a price of $18.256 per share.

The price is 120 percent of the average closing price of U.S. Bioscience shares as traded on the AMEX for the 10 days preceding the agreement.

The investment, Michael Boennighausen, manager of investor relations at Alza, told BioWorld Today, illustrates Alza's confidence in U.S. Bioscience and in its lead product, Ethyol, a cytoprotective agent that helps reduce the cumulative kidney toxicity associated with repeated administration of the chemotherapy drug cisplatin in advanced ovarian cancer or non-small cell lung cancer.

"We are very pleased with the performance of Ethyol and this investment allows us to participate in the long-term performance of the product in another manner," Boennighausen said. "We have a good working relationship with U.S. Bioscience and it is partially due to our confidence in that relationship, that we have made this investment."

Ethyol was introduced in the U.S. in April 1996 by Alza Pharmaceuticals, of Palo Alto, Calif. and is co-promoted by U.S. Bioscience., which, in December 1995, received $20 million in up-front payments from a potential $35 million collaboration with Alza for U.S. marketing and distribution of Ethyol.

The deal allowed U.S. Bioscience's 15-person sales force to co-promote Ethyol in conjunction with the 45-person sales force at Alza. Under the terms of this agreement, after five years, marketing rights will revert to U.S. Bioscience, which then pays Alza on sales of the product for 10 years. Alza has the option to extend the agreement by one year.

Sales of Ethyol from its launch in April 1996 to the end of the year were $9.4 million, Robert Kriebel, chief financial officer with U.S. Bioscience, said. "The fourth quarter, at $4 million, was double the preceding quarter," Kriebel said. "They [Alza] are pleased by the progress of the product and this investment allows them to participate as an investor in the long term and they and we will benefit by the additional investment we are making that these funds will permit."

"First, this investment by Alza is a big vote of confidence in the fortunes of U.S. Bioscience stock and the drug itself," analyst Alex Sisson, who follows both Alza and U.S. Bioscience for Hambrecht & Quist Inc., of New York, told BioWorld.

"Second, it looks like U.S. Bioscience will spend a lot of that money to run additional clinical trials and studies that in theory should accelerate usage of the drug," Sisson said. "Alza is reluctant to spend that much more money on research and development * it would hurt earnings * and U.S. Bioscience has the contractual right to do some of the research and development. This is a way for Alza to get the benefit of extra research and development spending and U.S. Bioscience won't have to deplete their cash in the short-term."

Founded in 1987, U.S. Bioscience, of West Conshohocken, Pa., focuses on the development and commercialization of products for treating patients with cancer and AIDS. It currently has nine products in its portfolio.

Its two marketed products besides Ethyol are Hexalen, an oral outpatient treatment for advanced ovarian cancer, and Neutrexin, an intravenous treatment for pneumocystis carinii pneumonia in immunocompromised patients, including those with AIDS.

Ethyol has recently been launched by an affiliate of Schering-Plough Corp., of Madison, N.J. in a number of major European countries, including France, Germany and the U.K. The product currently is under regulatory review in Canada and, under an agreement with U.S. Bioscience, will be marketed by Eli Lilly, of Indianapolis.

Alza, of Palo Alto, Calif., focuses on the development and commercialization of innovative pharmaceutical products using advanced drug delivery technologies to add medical and economic value to drug therapies. *