Alkermes Inc. entered a collaboration valued at more than $20million with Johnson & Johnson for use of the former's ProLeasedrug delivery system with an undisclosed compound developed bythe pharmaceutical company for hormone-mediated disorders.

The deal is the second negotiated with Johnson & Johnson, of NewBrunswick, N.J., in two months. In late October, the pharmaceuticalcompany agreed to pay Alkermes more than $20 million for use of itsMedisorb delivery system with another unidentified drug.

In mid-November, Alkermes, of Cambridge, Mass., signed anagreement, valued at up to $30 million, for the ProLease technologywith Genentech Inc., of South San Francisco.

The three partnerships together, noted Alkermes CEO Richard Pops,are worth more than $70 million and represent expansions ofcollaborations started as feasibility studies.

"Our strategy is paying off," Pops said. "We've worked on themolecules with partners in advance of signing a more formalagreement."

Instead of negotiating with the corporate partners for a completeprogram funding package up front, Pops observed, Alkermes firstdemonstrated the likelihood of success with its drug deliverytechnologies.

"We're willing to invest our time and resources, basically gettingreimbursed at cost, to get the best corporate partners," he said.

As a result, Alkermes ended up receiving a higher price for itstechnology and a partner that is committed to development of theproduct.

In the latest deal with Johnson & Johnson, Alkermes is working withthe pharmaceutical firm's R.W. Johnson Pharmaceutical ResearchInstitute to develop a ProLease delivered compound.

The ProLease vehicle is a polymeric microsphere, similar todissolving sutures, designed to achieve the sustained release andbiological activity of large, unstable proteins. The drug deliverysystem's advantage is reduction in frequency of administrations.

Alkermes and Johnson & Johnson declined to identify the compoundunder development with ProLease, saying only that it is a potentialtherapy for "hormone mediated disorders" and the goal is to achieveseveral weeks worth of treatment with one injection.

In return for using ProLease with its drug, Johnson & Johnson willcontribute development funding and make milestone payments worthmore than $20 million to Alkermes, which also will receive royalties.Alkermes also will manufacture the ProLease products for Johnson &Johnson.

The two companies negotiated the agreement following successfulcompletion of a feasibility study begun earlier this year.

In their other partnership, Johnson & Johnson is using Alkermes'Medisorb sustained release system to deliver an undisclosed smallmolecule compound. Medisorb is similar to ProLease, but cannothandle delivery of proteins.

The Medisorb collaboration was expanded to a full-fledgedpartnership following a Phase I study, whose results wereencouraging enough for Johnson & Johnson to continue clinicaldevelopment.

Alkermes' partnership with Genentech involves use of ProLease withthe latter's FDA-approved growth hormone. The collaborationmoved beyond a feasibility study after completion of a Phase I trialwhose positive results were the first demonstration of ProLease'seffectiveness indelivering therapeutic proteins to humans.

The sustained release system is expected to reduce daily injections ofthe growth hormone to once a month. Genentech's growth hormoneproducts, Protropin and Nutropin, are sold to treat short children whoare deficient in the hormone.

In January 1995 when Alkermes pitched ProLease to Genentech, italready had an in-house drug delivery technology under development.After evaluating ProLease, Genentech dropped its other program.

Alkermes also is working with Schering-Plough Corp., of Madison,N.J., for ProLease delivery of the pharmaceutical company's alphainterferon.

Alkermes' stock (NASDAQ:ALKS) closed Monday up $1 to$15.125. Johnson & Johnson (NYSE:JNJ) ended the day down$0.375 to $52.875. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.