Genentech Inc. presented positive Phase II data on a nerve growthfactor for diabetic peripheral neuropathy Tuesday, leading to plansfor a Phase III study and a $28.4 million payment by majorityshareholder Roche Holding Ltd.

Genentech, of South San Francisco, will record the $28.4 million ascontract revenue in third-quarter earnings, which will be releasedMonday. The payment was made because Roche exercised its optionto develop nerve growth factor (NGF) outside the U.S.

The six-month Phase II study, involving 250 patients at 15 sites in theU.S., showed NGF improved neurological function and sensation,specifically sensations of cooling detection and heat as measured bypain. "The results from this trial showed nerve growth factor wassubstantially better than placebo in improving small diameter nervefiber dysfunction in diabetic polyneuropathy," said KathleenRinehart, corporate communications manager at Genentech.

The company said about 20 percent of the 8 million people diagnosedas diabetics in the U.S. have symptomatic peripheral neuropathy. Thecondition is marked by the failure of small sensory neurons, causingpatients to lose feeling and sensation in their extremities. It can leadto serious complications.

"NGF," Rinehart said, "targets these small sensory neurons andpotentially promotes their survival, growth and regeneration. Theresults are definitely encouraging but obviously more study isneeded."

A Phase III trial involving 1,600 diabetic patients with peripheralneuropathy is scheduled to begin by the end of the year. Results areexpected in 1998. The primary endpoint will be improvement inobjective tests of neurological functions, similar to the Phase II study.A secondary endpoint will involve patients' perceptions.

Genentech President and CEO Arthur Levinson, in a preparedstatement, said, "Our Phase II results for NGF are sufficientlyencouraging for Genentech to make the scientific and financialcommitment to advance its clinical development with our partner,Roche. A therapy for diabetic peripheral neuropathy is truly an unmetmedical need."

Roche, of Basel, Switzerland, owns 66.5 percent of Genentech.Roche will conduct pivotal trials of NGF outside the U.S.

The Phase II results were presented at the 121st Annual AmericanNeurological Association Meeting in Miami. n

-- Jim Shrine

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