Alpha 1 Biomedicals Inc. has given SciClone Pharmaceuticals Inc.expanded rights to develop and market thymosin alpha 1, ending ayear-long battle over the drug, which is being tested primarily as atreatment for chronic hepatitis B.Under the original 1990 licensing agreement, SciClone, of San Mateo,Calif., has received regulatory approval in Singapore and expects tobegin selling the drug this year under the brand name Zadaxin forchronic hepatitis B. Thymosin alpha 1 was developed by Alpha 1, ofBethesda, Md.SciClone also has filed for product approvals in Hong Kong and Chinaand has clinical trials underway in Taiwan and Latin America.The agreement, announced Monday, replaces the 1990 licensing dealand expands SciClone's rights to thymosin alpha 1 to the U.S., Canadaand most of Europe. SciClone now has development and marketingrights worldwide, except in Italy, Portugal, Spain and Korea whereAlpha 1 has negotiated agreements with other companies.In return for the expanded rights, SciClone will pay Alpha 1 royaltiesof between 6 percent and 7 percent on sales in North America andEurope and 3 percent to 3.5 percent in areas that were part of theoriginal agreement. Neither up front cash nor exchange of stock isinvolved in the deal, which is expected to be final Sept. 30. SciClonealready owns 15.8 percent of Alpha 1.Both companies said the agreement ends the legal dispute and on-goingarbitration, which began last year, without payment of any damages.Royalty payments, clinical development control and manufacturingrights were among the issues concerning the drug, which is the leadproduct for each company.Alpha 1 President and CEO Vincent Simmon said the agreementreflects "a certain amount of bending" by both companies.Alpha 1 lost the first phase of arbitration, which ended in April, andlost rights as sole supplier of thymosin alpha 1 for SciClone. Simmonsaid Alpha also was in danger of losing royalties in territories licensedto SciClone in the 1990 agreement. Those areas, which includeSingapore, account for the vast majority of people infected withchronic hepatitis B."That's why you have two different [royalty] percentages," Simmonsaid. "Back in May, both parties decided to make a concerted effort toreach a mutual agreement."The new deal also gives SciClone control of clinical development in itsexpanded territories, including the U.S.Michelle Slade, SciClone's corporate communications manager, saidthe company has not decided how it will proceed with the U.S. trials. Inaddition to hepatitis B, the drug is being tested as a combinationtherapy for treatment of hepatitis C and AIDS.Disappointing preliminary results from Phase III U.S. trials ofthymosin alpha 1 for chronic hepatitis B sent the stock prices of bothSciClone and Alpha 1 plummeting in late April. The news drove Alpha1's stock down 68 percent to $2 and SciClone's fell 59 percent to$5.19. (See BioWorld Today, April 29, 1994, p.1.)SciClone's stock (NASDAQ:SCLN) closed Monday at $6.87, up 25cents. Alpha 1's stock (NASDAQ:ALBM) dipped 6 cents to $1.81.Slade said that SciClone has begun receiving data on the Phase III, which was conducted by Alpha 1, and will make its ownanalysis.Simmon said Alpha's analysis of the Phase III U.S. trials shows thedrug was not successful under the conditions set out for the studies. Hesaid two additional positive trials probably would be required for FDAapproval for chronic hepatitis B. In late May, SciClone reportedencouraging preliminary results from its Phase III trial in Taiwan.Thymosin alpha 1 is a synthetic version of the naturally occurringpeptide hormone thymosin. It is believed to stimulate the production ofcytotoxic T cells that recognize viral antigens or epitopes and destroythe cells that express them. n

-- Charles Craig

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