Chiron Corp. has agreed to pay $2.5 million to Progenitor Inc. toinitiate a long-term gene therapy collaboration that could be worthmore than $50 million if a minimum of 11 potential products basedon Progenitor's nonviral vector technology make it to market.

"This agreement is structured as a success-oriented, milestone-driven,research and development collaboration," said Douglass Given,Progenitor's president and chief executive officer.

The deal focuses on Chiron's use of Progenitor's nonviral vectors indevelopment of gene therapeutics for cancer, cardiovasculardisorders and infectious diseases.

Given said Progenitor, of Columbus, Ohio, retained all rights to itstechnology for products outside the scope of the 11 targetedtherapeutics and it established a preferred manufacturing agreementwith Chiron for products Progenitor pursues either on its own or incollaboration with other companies.

Under terms of the deal, Chiron, of Emeryville, Calif., paid $2.5million up-front and will pay another $500,000 in January 1996.Progenitor, a subsidiary of Lexington, Mass.-based InterneuronPharmaceuticals Inc., could realize more than $50 million based onachievement of clinical development milestones and market approvalof the therapeutic candidates.

The first project will focus on a gene therapy directed against solid-tumor cancers. Chiron and Progenitor said they expect to file aninvestigational new drug application in 1996 to begin clinical studies.

The gene therapy will involve delivery of a herpes simplex thymidinekinase activator with ganciclovir to destroy the tumors.

Given described Progenitor's nonviral vector technology, calledT7T7, as a self-initiating, self-sustaining gene expression system thatutilizes T7 RNA polymerase and promoter. The vector is designed todeliver the gene sequence to the cell's cytoplasm, rather thanintegrating it into the cell's genome, and the expression of therapeuticproteins takes place in nondividing as well as dividing cells.

Chiron's spokesman Larry Kurtz said the collaboration withProgenitor was not related to Chiron's unsuccessful attempt lastmonth to negotiate a merger with Viagene Inc., a San Diego companythat also has a gene therapy collaboration with Chiron.

Progenitor's vector technology, Kurtz said, broadens Chiron'sapproach to gene therapy. The collaboration with Viagene focuses onviral vectors, he noted, while Chiron also has an agreement withRibozyme Pharmaceuticals Inc., of Boulder, Colo., to use itsribozyme technology to control gene expression.

"We're trying to get all the necessary tools to explore the genetherapy field," Kurtz said.

Chiron's stock (NASDAQ:CHIR) closed Tuesday at $51.75, down37 cents. Interneuron (NASDAQ:IPIC) was down 50 cents to $7.62.n

-- Charles Craig

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