CytoTherapeutics Inc. stock jumped 14.5 percent Friday after itsigned an agreement worth as much as $41 million with Sweden-based Astra AB for the development of a chronic pain suppressantderived from the adrenal cells of newborn calves.

The drug, CereCRIB, is based on Providence-basedCytoTherapeutics' cellular replacement by immunoisolatorybiocapsule (CRIB), which contains the bovine adrenal cells. It isbeing developed to treat severe pain in cancer patients and is in PhaseI clinical trials in the U.S. and Phase I/II studies in Switzerland.

CereCRIB is implanted surgically at the base of the spine where thebovine adrenal cells, contained in a semipermeable membrane,release natural analgesics into the fluid space of the spinal column.The biocapsule is designed to be compatible with human tissue and toprotect the xenogeneic cells from rejection by the patient's immunesystem.

CytoTherapeutics Chairman and CEO Seth Rudnick said a singleimplant is expected to provide pain relief for six months to a year.

Terms of the collaboration give Astra an exclusive, worldwidelicense to develop and market CereCRIB. In return,CytoTherapeutics has received $5 million up front and will getanother $5 million annually for four years to cover research costs forthe company's pain control drug program. In addition to CereCRIB,the Astra deal includes other pain products in preclinicaldevelopment.

CytoTherapeutics also could receive another $16 million in milestonepayments from Astra based on the clinical development progress ofCereCRIB, and Astra will fund the clinical trials. CytoTherapeuticswill receive royalties on sales and manufacturing fees.

CytoTherapeutics' stock (NASDAQ:CTII) closed Friday at $6.87, up87 cents.

Mark Simon, of Robertson Stephens & Co. in San Francisco, said theAstra deal gives CytoTherapeutics about two years worth of cash anda collaboration with a major pharmaceutical firm. Astra accounts forabout 50 percent of U.S. sales in spinal analgesic products.

Rudnick said the collaboration with Astra representsCytoTherapeutics' strategy of raising funds through corporatepartnering, rather than the capital markets.

In March 1994, CytoTherapeutics signed a potential $15 millionagreement with Genentech Inc., of South San Francisco. The dealinvolved development and marketing of drugs using CRIBtechnology to encapsulate cells producing neurotrophic factors fortreatment of neurodegenerative diseases.

CereCRIB uses bovine adrenal chromaffin cells taken from calvesthat normally would be destroyed. A single implant contains one doseand each calf can produce 30 doses. However, CytoTherapeutics alsois working on a second generation product using geneticallyengineered cells to substitute for the natural ones.

Data from the Phase I U.S. trials are expected by the end of this year.The studies will include as many as 15 late-stage cancer patientswhose pain has not been relieved by other treatments. The Phase I/IItrials in Switzerland will include 40 patients.

In a 1993 Phase I study in Switzerland, involving three cancerpatients, CereCRIB was found to be safe and pain relief was reportedin two patients. n

-- Charles Craig

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