By Charles Craig

Biogen Inc., which said in January it was negotiating for acollaboration in gene therapy, completed the dealTuesday by agreeing to invest $35 million in GenovoInc., a start-up company founded by two University ofPennsylvania researchers.

In return for its investment, Cambridge, Mass.-basedBiogen received what spokeswoman Kathryn Bloomdescribed as "a significant minority equity interest" in thefledgling Philadelphia gene therapy company, whichinitially will focus on liver and lung disorders.

The first disease targets, Bloom said, are cystic fibrosisand familial hypercholesterolemia. Biogen boughtworldwide exclusive rights to any products targeted forthose two genetic disorders as well as exclusive rights toan additional 20 gene therapy drugs developed byGenovo.

Biogen's $35 million contribution, which will fund start-up costs and research for Genovo, will be spread overfive years. Biogen's stock (NASDAQ:BGEN) dropped$1.13 cents Tuesday, closing at $50.75.

Bloom said the funding is viewed by Biogen as a long-term investment and is intended to bolster the company'sproduct pipeline.

The financing is the first corporate partnership forGenovo, which was founded in 1992 by James Wilsonand Mariann Grossman, both of the Institute for HumanGene Therapy at the University of Pennsylvania inPhiladelphia.

Wilson is the director of the institute and serves asscientific consultant to Genovo. Grossman, who hasworked with Wilson since 1988 when they were at theMassachusetts Institute of Technology's WhiteheadInstitute in Cambridge, is Genovo's president, chiefoperating officer and, currently, lone full-time employee.She left the University of Pennsylvania this year toconcentrate on developing the company.

Grossman said Biogen's funding actually is Genovo'sseed financing. Unlike most biotechnology start-ups,Genovo eschewed venture capital firms in favor offinding financial backing from a company that would besympathetic to the tough development hurdles facinggene therapy.

"We saw the pitfalls" involved with venture capitalists,she said. "We didn't want to spend a lot of time raisingmoney. We are set to do the science and we want toconcentrate on doing the science."

It took a year to negotiate the deal with Biogen, but nowthat she has the funding, Grossman said she will beginlooking for laboratory facilities and a team of scientists.

In addition to Biogen's commitment, Grossmannegotiated licensing and research sponsorship agreementswith the University of Pennsylvania giving Genovo rightsto patented discoveries emanating from Wilson'sinstitute.

Gordon Williams, senior vice president of academic andclinical affairs for the university's health system, said theschool will get research funding, patent reimbursementsand royalties on products from Genovo. In addition, theuniversity received a small equity interest in Genovo.

Grossman said Genovo has considerable expertise in itsfirst two disease targets. Wilson has conducted extensivework on gene therapy for cystic fibrosis. Grossman hasbeen involved in studies on familialhypercholesterolemia, a deadly childhood disordercharacterized by excessive cholesterol in the blood.

She said Genovo "hopes to be in Phase I or Phase IItrials" with gene therapy drugs within five years. Thecompany will concentrate on in vivo gene therapy.

Grossman said Genovo eventually intends to developnon-viral vectors, but also will work with viral vectors.

Wilson's research has focused on modifying viral vectors,such as adenoviruses, adeno-associated viruses andretroviruses, to enable them to avoid attack by patients'immune system. n

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