Schering-Plough Corp. paid ICN Pharmaceuticals Inc. a$23 million licensing fee for rights to test the latter's anti-viral agent in combination with Schering-Plough's alphainterferon product for hepatitis C.

Schering-Plough plans to initiate Phase III clinical trialsof its Intron-A in combination with Virazole (ribavirin)late this year or early next year. Small studies, most ofthem sponsored by investigators, have shown the agentsin combination have better effect than Intron A, whichalready is approved for the treatment of hepatitis C.

ICN, of Costa Mesa, Calif., has applications pending thatseek approval of Virazole as a monotherapy for hepatitisC. But the FDA sent ICN a non-approvable letter lastNovember, leading the company to realize it lacked theresources to take it forward alone, said David Calef,ICN's vice president, communications.

Calef would not say whether ICN plans to continueseeking approval of Virazole in Europe, Canada,Australia and other countries where marketingapplications are pending. He said Schering-Plough will betaking over research and development activities as theyrelate to the combination therapy.

ICN potentially can get another $42 million in milestonepayments, in the form of equity purchases, which kick inwhen each of three targets are met: approval in one of anundisclosed group of countries; approval in Europe; andFDA approval. The companies would not disclose howmuch would be received from attainment of eachmilestone.

ICN's stock slipped significantly after its vague pressrelease in December said the FDA wanted more data onVirazole for the treatment of chronic hepatitis C. Thestock fell further after the company's chairman and CEO,Milan Panic, was accused of selling shares ahead of thebad news. And the stock continued its drop, down to $15per share, when an ICN board of directors committeecleared Panic of any wrongdoing.

ICN (NYSE:ICN) gained $2.75 on Monday's news,closing at $19.63. Schering-Plough (NYSE:SGP) was up38 cents at $46.50.

Steve Galpin Jr., Schering-Plough's vice president,communications, told BioWorld that the company isn'tconcerned about the history of ICN's hepatitis C filings."The answer goes to the compound," he said. "Scheringis interested in licensing rights to this compound."

A Potential Boost For Intron A Franchise

The reason for the deal, Galpin said, is the possibility thatthe combination therapy would provide sustained ratesfor many hepatitis C patients, and the resultingstrengthening of Schering-Plough's Intron A franchise.

Most of the small studies of the combination therapy havetested it against alpha interferon alone. Sustainedresponses rates after six months of combination therapytreatment have been about 50 percent for those nevertreated with interferon (vs. between 15 and 30 percent oninterferon monotherapy); for relapsed patients, sustainedrates have been 65 percent vs. negligible response withmonotherapy; and 15 percent in the non-responder group,Galpin said.

He said multinational trials are expected to begin inEurope late this year or early in 1996, and in the U.S. in1996. If the product is approved, Schering-Plough wouldmarket the drug under another name.

ICN would get royalties on sales of the combinationtherapy everywhere except Europe, where it has co-marketing rights.

Virazole, a broad-spectrum antiviral, already is being soldin more than 40 countries, for up to eight indications.Intron A, licensed from Biogen Inc., of Cambridge,Mass., is marketed in 68 countries for as many as 16indications. n

-- Jim Shrine

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