Sugen Inc. partnered its broadly applicable technology in anophthalmic collaboration Tuesday that will bring in cash while thecompany continues toward its goal of creating a U.S. cancer business.

Sugen, of Redwood City, Calif., will use its small molecule signaltransduction inhibition technology in an collaboration with AllerganInc. that has an estimated value approaching $30 million. Allergan, ofIrvine, Calif., gained rights to all ophthalmic applications of productscoming from the alliance.

Allergan will pay Sugen a $2 million technology set-up fee and isbuying $4 million of Sugen stock at $20.88 per share, a significantpremium to the market price. Allergan will purchase another $3million of Sugen stock at the market price when Sugen has anotherpublic offering.

Tim Wilson, an analyst at UBS Securities in New York, estimatedSugen's potential milestones at $11 million to $13 million. Allerganalso will fund research and discovery work at Sugen for three years.

Sugen stock (NASDAQ:SUGN) gained 38 cents Tuesday to close at$13.38 after reaching $14.50 earlier in the day.

Sugen and Allergan initially will focus on developing angiogenesisinhibitors for treating neovascular diseases such as age-relatedmacular degeneration and diabetic retinopathy. Allergan will beresponsible for in vivo disease models and all development functions.

Nina Ferrari, Sugen's manager of corporate communications andinvestor relations, said Sugen is pleased to create value for itstechnology in an area it wasn't going to pursue. "Allergan was theprefect partner because it has ophthalmic experience," she said. "Wecan pass it off to them to move forward. It isn't an area we wanted tobuild up within Sugen."

Wilson, in a report Tuesday, said, "Sugen's signal transductiontechnology is directly applicable to blocking ophthalmicangiogenesis, the process by which aberrant blood vessel formationin the eye contributes to a loss of vision. Sugen has workedextensively on the Flk-1 signaling pathway, a pathway known tofunction in new blood vessel formation, and has identified severalsmall-molecule inhibitors of this signaling."

Flk-1's role in tumor angiogenesis was discussed in a paper in theAug. 1, 1996, issue of the journal Cancer Research. As a malignancygrows, it secretes vascular endothelial growth factor. The moleculebinds to Flk-1 receptors, which signals endothelial cells liningarteries, veins and capillaries to lay down blood vessels aimed attumor mass. (See BioWorld Today, Aug. 8, 1996, p. 1.)

Flk-1, Ferrari said, is one target Sugen believes strongly associatedwith angiogenesis, but the work with Allergan will not be limited toFlk-1.

"Recent advances in our understanding of the signaling mechanismsinvolved in new blood vessel growth suggest that intervening againstcertain growth factor receptors and their associated signalingpathways may provide a promising approach to the development ofnovel angiogenesis inhibitors," said Lester Kaplan, an Allergan vicepresident of Science and Technology.

"We believe," Kaplan said, "that combing the technologiesdeveloped by Sugen with Allergan's ophthalmic research provide theopportunity for defining the correct signal transduction targets andfor developing novel target-specific drugs to address majorophthalmic diseases."

Sugen already has ongoing partnerships in oncology areas withASTA Medica AG, of Frankfurt, Germany, and with the ZenecaGroup, of London. Wilson estimated Sugen could earn more than$130 million from the three collaborations. He said a fourthcollaboration could be expected by mid-year 1997.

Separately, Sugen is in the clinic with the cancer drug SU-101, asignal transduction inhibitor. It is nearing studies in psoriasis withSU5271, an inhibitor of epidermal growth factor receptor, and has anumber of other preclinical programs. n

-- Jim Shrine

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

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