Aronex Pharmaceuticals Inc. and Genzyme Corp., which have beencollaborating on a lipid-based form of a retinoid for cancer since1993, are nearing completion of a Phase II/III study in Kaposi'ssarcoma and are slated to begin a pivotal Phase III trial within thenext year.

Genzyme, of Cambridge, Mass., agreed Wednesday to pay Aronex,of The Woodlands, Texas, a $2 million cash advance on a milestonepayment tied to the start of a Phase III study. The total $5 millionpayment is to be made in the form of an equity investment byGenzyme. The price per share of Aronex stock will be determinedwhen the milestone is achieved.

Connie Stout, Aronex's manager of corporate communications, saidthe Phase II/III trial of TretinoidLF _ a lipid-based form of all-transretinoic acid _ should be complete by the end of 1996 or early 1997when the companies will examine the data. If a Phase III study in anon-hematologic cancer, such as Kaposi's sarcoma, is not startedbefore the fall of 1997, Aronex will repay Genzyme the $2 millionadvance.

The development of TretinoidLF began in 1993 in a collaborationbetween Genzyme and Aronex's predecessor company, ArgusPharmaceuticals Inc. In September 1995, Argus merged with TriplexPharmaceuticals Corp. and Oncologix Inc. to form Aronex.

Under the original agreement, Genzyme already has made a $4.5million equity investment. The deal also called for Genzyme to payup to $1.5 million as other milestones were achieved.

In addition to the Phase II/III trial for Kaposi's sarcoma, Genzymeand Aronex are conducting a Phase II study for treatment of acutepromyelocytic leukemia.

Stout said the Phase II leukemia trial also is expected to be completeby the end of this year or early next year.

Tretinoid and other retinoids are derivatives of vitamin A. Thenaturally occurring compounds play a role in cell differentiation andgrowth. Because many cancer cells remain in undifferentiatedimmature states multiplying uncontrollably, the introduction oftretinoid is designed to force the cells to differentiate and mature,ending their malignant proliferation.

Aronex uses tretinoid with a lipid carrier for more effective deliveryof drug to the cancer site.

The company's other drug development programs include Nyotran _a lipid-based form of the anti-fungal agent, nystatin _ and Zintevir,an integrase inhibitor for AIDS.

Nyotran is in two late-stage trials, a Phase II/III and Phase III, forfungal infections. Zintevir is in two Phase I studies _ one evaluatinga single dose and the other testing multiple doses.

In May 1996, Aronex completed a public offering of 6 million sharesat $5 per share, raising gross proceeds of $30 million.

The company's stock (NASDAQ:ARNX) closed Thursday at$10.625, up 25 cents. n

-- Charles Craig

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