Genentech Inc. and Scios Nova Inc. entered into the firstcollaboration of the year, and it was a big one, worth up to $100million to Scios Nova.

The California companies will jointly develop and co-promote SciosNova's lead product, Auriculin, in North America. Genentech getsmarketing rights in all other areas to the product, an atrial natriureticpeptide being developed for acute renal failure.

Genentech, of Mountain View, made a $20 million equityinvestment in South San Francisco-based Scios Nova. The agreementalso gives Scios Nova access to a $30 million loan through 2002, andto $50 million in potential milestone payments, $30 million of whichwould be met with FDA approval of the drug. Scios Nova would getanother $15 million when European sales of Auriculin exceed $150million, and $5 million upon approval in Japan.

Auriculin (anaratide) is being tested in a 500-patient Phase III trialfor acute renal failure. Enrollment is expected to be completed inFebruary, and results announced mid-year, officials at bothcompanies said.

"Our experience with this peptide combined with what Scios Novaalready has done, makes for a good combination," Jim Weiss,Genentech's senior manager, corporate communications, toldBioWorld. "It allows Genentech to pursue another unmet medicalneed without diverting our internal resources away from the manyprojects we already have going on."

The primary endpoint in the double-blind, placebo-controlled PhaseIII trial, being conducted at more than 60 centers in the U.S. andCanada, is reduction in the need for dialysis. Secondary endpointsinclude mortality and economic factors, such as length of hospitalstay or time in the intensive care unit. Auriculin is administered byintravenous infusion over 24 hours.

A 54-patient Phase II study of Auriculin showed it reduced the needfor dialysis in patients suffering acute renal failure. Twenty-threepercent of those treated with Auriculin plus standard care requireddialysis compared with 54 percent of those receiving standard carealone. Researchers also reported that patients receiving Auriculin hada mortality rate of 17 percent compared to 37 percent of those in thestandard care group, though the difference was not statisticallysignificant.

Scios Nova scientists cloned the gene for human atrial natriureticpeptide (ANP), and produced it both synthetically and byrecombinant DNA technology. The synthetic version is being used inthe Phase III trial and for commercialization purposes, said KiraBacon, Scios Nova's director of investor relations.

The hormone ANP, while produced by the heart, also influenceskidney function. It increases the elimination of water and salt fromthe body, dilates the blood vessels, and decreases the secretion ofother hormones that lead to blood vessel constriction and elevatedblood pressure.

"The partnership with Genentech is consistent with Scios Nova'sstrategy to develop an acute-care marketing presence in NorthAmerica and to form an alliance for commercialization outside NorthAmerica," said Richard Casey, Scios Nova's chairman and CEO. "Apartnership with Genentech will help ensure the successful launch ofAuriculin and accelerate the market penetration in North America."

G. Kirk Raab, Genentech's president and CEO, said, "Auriculincomplements our rich pipeline of new products, and we have manystrengths, including expertise with natriuretic peptides, that whenadded to Scios Nova's will create a very powerful team" in a newtreatment for acute renal failure.

Genentech, with its $20 million equity investment, purchased a newclass of nonvoting preferred stock convertible into about 2.1 millionshares of common stock, at about $9.52 per share, a premium toScios Nova's current price. The conversion would give Genentechabout 5.7 percent of Scios Nova's shares, which currently numberabout 35.3 million.

Scios Nova reported about $90 million in cash on Sept. 30, andexpects to burn $20 million to $23 million this year, Bacon said. The$30 million loan can be drawn down anytime through 2002 and paidback, at Scios Nova's option, in cash or in stock at the prevailingmarket price.

The deal was announced after the stock market closed on Tuesday. n

-- Jim Shrine

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

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