The Immune Response Corp., proving it has more than an HIVvaccine in development, said Tuesday it signed a deal with BayerCorp. on a gene therapy product for hemophilia A.

Immune Response is getting $10 million up front in addition toresearch payments, potential milestones and sales royalties. Bayeralso is covering costs associated with product development, and isresponsible for manufacturing and sales.

Bayer, of Pittsburgh, will receive an exclusive license to ImmuneResponse's gene delivery technology for the delivery of the FactorVIII gene, and has an option to negotiate for the use of thattechnology for other blood coagulation disorders.

Immune Response, of Carlsbad, Calif., received a $6 million licensefee. Bayer will make a $4 million equity investment when ImmuneResponse prices a pending public offering. The company registeredfor a 2.5 million share offering last month. The offering will beincreased by about 400,000 shares to accommodate the Bayerinvestment, which will be made at the offering price.

Immune Response's stock (NASDAQ:IMNR) lost 50 cents Tuesdayto close at $9.75.

Charles Cashion, vice president and chief financial officer at ImmuneResponse, said additional terms would not be disclosed. But he saidthe deal is valued at more than $50 million when all funding isconsidered.

Immune Response is contributing its non-viral delivery systemtargeting the liver. Bayer's Factor VIII gene will be attached topolylysine, a linker molecule, that is attached to acialaglycoprotein,which connects to a receptor on the liver. Intravenous injection of theproduct gets 90 percent of the material to the liver within 10 minutes,Cashion said.

"We have been developing this technology and now have preclinicalevidence genes can be delivered to the liver, along with expression ofproteins in the liver," said Cashion, adding that liver-targeting genetherapy approaches also are being developed for atherosclerosis andhepatitis.

Hemophilia A is a hereditary coagulation disorder in which sufferersare missing the gene that produces the clotting factor, Factor VIII.Patients currently are treated with recombinant Factor VIII or thatderived from plasma. A gene therapy treatment could offersignificant advantages to either of those approaches.

"Bayer brings tremendous experience in the development ofhemophilia treatments," said Donald Hyman, director of corporatecommunications for Bayer's Pharmaceutical Division, in WestHaven, Conn. Bayer developed recombinant Factor VIII, calledKogenate, with Genentech Inc., of South San Francisco, and also is inthe plasma-derived market. "We're in a very good position to takeadvantage of this therapy and bring it to market efficiently," he said.n

-- Jim Shrine

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