Seragen Inc. and Eli Lilly & Co. signed a definitive agreementWednesday to align in a deal worth up to $45 million for thedevelopment and marketing of Seragen's fusion toxin molecules fortreatment of cancer and other diseases. (See BioWorld Today, July 18,1994, p.1.)The initial area of the collaboration will focus on developing Seragen'sinterleukin-2 fusion toxin for oncology. An addition to previouslyannounced details includes Lilly covering all further costs of thedevelopment of IL-2 fusion toxin for cancer, which Seragen estimatedat $17 million. Seragen, of Hopkinton, Mass., also said it will focus onthe development of IL-2 fusion toxin for psoriasis, an area in which thecompany already completed a Phase I/II study.Lilly, of Indianapolis, will make an initial payment to Seragen of $10million, $5 million of it to buy Seragen stock and $5 million as anadvance against its purchase of bulk product from Seragen. Lilly alsowill pay Seragen $10 million based on meeting certain milestones inthe development of IL-2 fusion toxin for cancer. Lilly, which has theoption to rights of IL-2 fusion toxin for other indications, will pay $5million for each option it exercises.Under terms of the agreement, Lilly gets exclusive worldwidedevelopment, distribution and marketing rights, except in certain Asiancountries, for cancer indications."This is an excellent deal structure for Seragen," Seragen CEO GeorgeMasters said. "We receive capital and a partner to fund expensiveclinical trials. And, we have agreed to a competitive package ofmilestone payments and percentage of end-user sales. Furthermore,retaining manufacturing of bulk material and dermatologic marketingrights gives us the opportunity to develop as a fully integratedbiopharmaceutical company."The deal was made public Wednesday afternoon. Seragen(NASDAQ:SRGN) stock rose 25 cents after the announcement, closingat $6.75 per share. _ Jim Shrine
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