ImmuLogic Pharmaceutical Corp. signed a multiple sclerosis drugdevelopment collaboration with Germany-based Schering AG thatcould be worth up to $35.5 million to the Waltham, Mass.-basedcompany.

Under the agreement, Schering will conduct clinical trials ofImmuLogic's peptide-based therapeutic and will market the product.

By licensing ImmuLogic's approach, analysts said Schering ismoving to expand its treatment options for the disease. The Germanpharmaceutical giant, through its subsidiary, Berlex LaboratoriesInc., in Wayne, N.J., sells Betaseron in the U.S. for multiplesclerosis. Betaseron is a recombinant form of beta interferondeveloped in association with Emeryville, Calif.-based Chiron Corp.

Betaseron is a treatment for the disease, not a cure. The drug islicensed to reduce the frequency of flare-ups in patients withrelapsing-remitting multiple sclerosis.

The cause of multiple sclerosis is not known, but ImmuLogic'speptide-based approach is designed to target the underlyingmechanism of the autoimmune disease.

Richard Small, ImmuLogic's chief financial officer, said preclinicalstudies have identified a potential peptide candidate for clinicaldevelopment, but no decision has been made on when trials inhumans will begin.

Schering has agreed to make an $8 million equity investment inImmuLogic and the purchase of more than 1 million shares will giveSchering about a 6 percent interest in ImmuLogic.

In addition, Schering will pay ImmuLogic $7.5 million in researchfunds over the next three years and up to $20 million in milestonepayments based on the development of the treatment. ImmuLogic,which has agreed to contribute one-third of the clinical developmentcosts, also will receive royalties on net sales.

ImmuLogic's stock (NASDAQ:IMUL) closed Monday at $7.81,down 19 cents.

Wendy Neininger, spokeswoman for Berlex, said the ImmuLogiccollaboration represents a commitment to continuing studies into thecause of multiple sclerosis.

Multiple sclerosis is a central nervous system disease resulting indamage to the myelin sheath, which is a protective coating aroundnerve fibers. Destruction of myelin interrupts nerve impulses andcauses a wide range of functional disabilities.

ImmuLogic's preclinical studies have suggested its peptide-basedapproach can inactivate T cells that trigger the immune system attackagainst myelin.

The agreement with Schering, Small said, is ImmuLogic's secondmajor corporate alliance and another validation of its approach totreating T cell-mediated autoimmune diseases. The company has usedthe same technology to develop drugs for treatment of allergies withits Allervax products.

Earlier this month, ImmuLogic expanded its collaboration withMarion Merrell Dow, of Kansas City, Mo. to develop the Allervaxdrug candidates. The most advanced is Allervax Cat, which isexpected to begin Phase III studies by the end of March. The drug isdesigned as a treatment for people who are allergic to cats. n

-- Charles Craig

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