U.S. Bioscience Inc. is getting $20 million in up-frontpayments from a potential $35 million collaboration withAlza Corp. for U.S. marketing and distribution of Ethyol.

The product was approved Monday to reduce thecumulative renal toxicity associated with repeatedadministration of cisplatin in patients with advancedovarian cancer. U.S. Bioscience, of West Conshohocken,Pa., is testing Ethyol in a number of trials in othercytoprotective indications, all of which would be coveredby the collaboration announced Wednesday.

The deal allows U.S. Bioscience's 15-person sales forceto co-promote Ethyol with the 45 sales people at Alza.After five years (or six) marketing rights will revert toU.S. Bioscience, which then would pay Alza on sales ofthe product for 10 years. The first $20 million in theagreement is an up-front payment and distribution fee.U.S. Bioscience could get another $15 million "in thenext few years" based on undisclosed clinical activities.

While the approval of Ethyol came a few years later andfor a narrower indication than company officials mayhave hoped, it still went a long way toward solidifyingU.S. Bioscience's balance sheet. The company's cashposition increased from $15 million at the end of the thirdquarter to more than $50 million because of the $20million from Alza and another $20 million raised in aprivate placement on Monday. (See BioWorld Today,Dec. 12, 1995, p. 1.)

U.S. Bioscience's stock (AMEX:UBS) lost 6 centsWednesday to close at $4.31. Alza (NYSE:AZA) gained75 cents to close at $23.25.

Despite the lack of stock movement, analyst Alex Zisson,who follows both Alza and U.S. Bioscience forHambrecht & Quist Inc., of New York, said it was a nicedeal for each company.

"It's a great deal for U.S. Bioscience because it's reallyback-end loaded," Zisson said, referring to the return ofproduct rights in five or six years. "The company isputting its money where its mouth is. If the company trulybelieves Ethyol has the potential to be a $100 million to$150 million product in a few years, that's when youwant to own it. In theory Alza will have done all thelegwork to build up the product."

For Alza, of Palo Alto, Calif., it fills a pipeline gap, andgives Alza's sales force, which now is co-promoting afew products, entry into the oncology market, Zisson said.

Zisson said the drug does have the potential to a be a bigseller, "but with current clinical data you can only haveconfidence in $20 million of that. The next major clinicalmilestones are going to be some of the Phase III label-expansion studies, probably in the second half of 1997." n

-- Jim Shrine

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