British Biotech plc said Wednesday that it reached anagreement with Glaxo Wellcome plc to collaborate on thedevelopment of a potential oral arthritis drug BritishBiotech has in preclinical studies.

The product, BB-2983, is the lead candidate in BritishBiotech's development program based on what it callsTMIs, or dual inhibitors of tumor necrosis factor andmatrix metalloproteinase. If successful, the drug wouldreduce the pain and swelling of arthritis while preventingjoint damage.

Glaxo, of London, paid Oxford, England-based BritishBiotech $4.7 million up front, and will fund alldevelopment of BB-2983 going forward. In return, Glaxogot worldwide marketing rights. British Biotech can earna series of milestone payments related to developmentand approval, and would get royalties on sales.

The companies are not releasing additional financialterms. But company officials told BioWorld Today thepotential payments rank among the top tier of deals donebetween pharmaceutical and biotechnology companies.

James Noble, British Biotech's finance director, saidresearchers have been working on the dual-inhibitorprogram since the company's founding in 1986. "We'vefound it incredibly difficult to get these drugs absorbed bythe mouth," he said. "It's the culmination of nine years ofwork."

The search for a partner in arthritis was more than a yearin the works for British Biotech, and satisfied acommitment to shareholders that a collaboration wouldbe formed by the end of 1995, Noble said. Clinical trialsof BB-2983 are expected to begin in the second half of1996, he said. Provisions in the deal also allow Glaxo todevelop BB-2983 or back-up compounds forinflammatory bowel disease and osteoporosis.

Glaxo and British Biotech also are collaborating inasthma on an oral formulation of British Biotech'slexipafant, which is a platelet activating factor antagonistthat was effective in recent Phase II pancreatitis studies.And British Biotech has BB-2516 in 11 different Phase IIstudies in North America and Europe for cancerindications.

While BB-2516 and British Biotech's lead compound,batimastat, are inhibitors of matrix metalloproteinase, theinhibition of tumor necrosis factor _ as well as thedrug's oral bioavailability _ gives BB-2983 anadvantage over current arthritis therapies, Noble said,which either modify the disease or reduce the pain.

British Biotech's stock, already up significantly since thesummer, closed in London Wednesday at 832 pence, up64 pence. The shares were less than 5 until the middle ofAugust. In American depository receipts(NASDAQ:BBIOY), the price was unchangedWednesday at $25.50. But the stock has gained 40percent in the U.S. since Sept. 14, 1995, when BritishBiotech released lexipafant Phase II results.

The stock price is significant in that British Biotech has$76 million in outstanding warrants that will be exercisedin January 1996 if the share price is more than 525 pence.Currently, the company has about $56 million in cash anda burn rate of $50 million per year. If the money from thewarrants comes in, the company should have resourcesthat last into 1998, Noble said.

British Biotech's strategy is to partner drugs that addresswidespread diseases _ such as asthma and arthritis _that would require a large sales force to market. The ideais to get a partner for those programs once a leadcompound is identified, Noble said.

James Niedel, Glaxo Wellcome's executive director ofresearch and development, said, "Arthritis is a seriousand widespread condition and current treatments for ithave limitations. We are pleased to be entering into theagreement with British Biotech and will commitsignificant resources to the development of BB-2983." n

-- Jim Shrine

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