Regeneron Pharmaceuticals Inc. will receive up to nearly $30 millionover the next five years in a drug discovery collaboration withProcter & Gamble Corp. focusing on treatments for muscle diseasesand disorders.
In the $28.75 million deal, Procter & Gamble, of Cincinnati, agreedto buy $10 million worth of Regeneron stock and pay $3.75 millionin research funds annually for up to five years.
Procter & Gamble has paid the $10 million, said Murray Goldberg,Regeneron's chief financial officer. The number of Regeneron sharespurchased will be determined during the first half of 1997 and will bebased on a 27 percent premium to an average trading price.
Regeneron's stock (NASDAQ:REGN) closed Friday down $2.375 to$18.75 after jumping $1.25 the day before on news of the Procter &Gamble alliance.
Regeneron, of Tarrytown, N.Y., and Procter & Gamble will shareequally profits of marketed drugs emerging from the collaboration.Both companies will contribute their research on muscle disorders tothe drug development efforts.
Regeneron president and CEO, Leonard Schleifer, said the Procter &Gamble agreement is representative of his company's strategy forderiving long-term income growth from its research and developmentprograms.
Rather than a royalty-based deal with milestone payments tied toclinical trial progress, Regeneron has opted for profit sharing throughjoint development efforts with its partners.
Schleifer noted Regeneron's drug development pacts with GlaxoWellcome plc, of London, Amgen Inc., of Thousand Oaks, Calif.,and Pharmacopeia Inc., of Princeton, N.J., are 50-50 partnershipssimilar to the Procter & Gamble deal.
Regeneron's collaborations, Goldberg said, are designed to enableshareholders "to participate fully in the upside success andprofitability that may result from marketed products."
On the flip side, Goldberg observed, Regeneron contributes todevelopment expenses. Although Procter & Gamble is providingRegeneron with early stage research support of up to $18.75 million,the two companies will share clinical development costs.
The collaboration combines Regeneron's work on skeletal muscleswith Procter & Gamble's research on cardiovascular muscle activity.
James Schwartz, Procter & Gamble's manager of public relations,said the company's only market presence in the area of muscledisorders is Dantrium (dantrolene sodium), a muscle relaxant. Headded Procter & Gamble has compounds under development forcardiac arrhythmia, which is irregular heart beat.
Regeneron's research includes its discoveries related to the muscle-specific-receptor kinase (MuSK) and agrin, a signaling protein. (SeeBioWorld Today, June 12, 1996, p. 1.)
MuSK and agrin, Goldberg said, are involved in nerve-musclecommunication and may have therapeutic value in treating muscledeterioration, such as muscle atrophy caused by immobility.
Regeneron and Procter & Gamble said their collaboration involvesearly stage research and potential drugs may take years to develop.
The Procter & Gamble partnership represents another jump inRegeneron's rebound from a clinical trial failure in June 1994 of itslead compound, ciliary neutrophic factor (CNTF), for treatment ofamyotrophic lateral sclerosis (ALS). Discontinuation of CNTFdevelopment for ALS sent Regeneron's stock tumbling to low singledigits.
Regeneron's recovery was spurred by P. Roy Vagelos, formerchairman and CEO of Merck & Co. of Whitehouse Station, N.J..When Vagelos joined Regeneron in January 1995, the company'sstock soared 82 percent in two days, reaching $6.37. Thursday'sclosing price of $21.125, following the announcement of the Procter& Gamble deal, represented a 232 percent increase in share price inless than two years.
As for Regeneron's other alliances, the collaboration with GlaxoWellcome, which began in 1993, is focused on development of smallmolecule compounds for neurodegenerative and psychiatric diseasesand pain.
The Amgen agreement dates to 1990 and involves two Regeneronneurotrophic factors, including brain-derived neurotrophic factor,which is in Phase III trials for ALS.
Regeneron's deal with Pharmacopeia was negotiated in October 1996and is aimed at developing small molecules that mimic or antagonizevarious cytokines and growth factors.
In June 1996, Regeneron entered a collaboration with Medtronic Inc.,of Minneapolis, for use of its implantable pump to deliver, Axokine,a Regeneron drug for treatment of Huntington's disease. Axokine is agenetically modified form of CNTF, which is believed to help nervecells survive. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.