Celtrix Pharmaceuticals Inc. and Genzyme Corp. announced Monday acollaboration in which Genzyme acquired worldwide rights, excludingAsia, for all systemic applications of BetaKine, or recombinanttransforming growth factor beta-2 (TGF-beta-2).Celtrix, of Santa Clara, Calif., retains all rights in ophthalmic areas andhas the option to reacquire rights to areas not pursued by Genzyme, ofCambridge, Mass., which is expected initially to focus on continueddevelopment of BetaKine for dermal wound repair and multiplesclerosis.Genzyme bought $10 million in Celtrix stock _ 1.55 million shares at$6.45 per share _ which represents about 10 percent of the 15.9million shares Celtrix has on a fully diluted basis. Celtrix also has theoption to sell Genzyme up to $10 million more in stock in December1995, with certain pricing contingencies.Genzyme also has committed to funding research and developmentwork to be conducted at both companies that is projected to cost morethan $60 million. Celtrix will get unspecified milestone payments, andwill manufacture and sell BetaKine to Genzyme during Phase I/II trials.Genzyme will take over manufacturing responsibilities for Phase IIItrials and for commercial sale, at which time it would pay royalties toCeltrix."We've been convinced now for a period of time that transforminggrowth factor beta is a potent biological regulator of a number ofprocesses that will have therapeutic utility," Richard Douglas,Genzyme's vice president of corporate development, told BioWorld."The enhancement of tissue repair as well as the immune modulatoryfunctions of BetaKine are only two of the many potential therapeuticuses of this molecule."Douglas said a Phase I/II trial of BetaKine for dermal wound repair iscompleted, and an expanded Phase II study should be initiated by theend of the year. BetaKine is in a Phase I study for multiple sclerosis.The product is furthest along in ophthalmic areas, where it is in PhaseIII testing for macular holes and Phase II for macular degeneration."Our long-term objective for BetaKine has been to focus companyresources on the commercialization of ophthalmic therapies and toform corporate alliances for most other applications," said DaleStringfellow, president and CEO of Celtrix. "Our agreement withGenzyme ensures (non-ophthalmic) projects will be given high priorityand advance as rapidly as possible toward potentialcommercialization."Michael Walsh, an analyst with Robertson, Stephens & Co., of SanFrancisco, told BioWorld, "It's a good deal for everyone involved.Genzyme gets a great addition to its product portfolio because TGF-beta has real potential in both wound healing and multiple sclerosis.The company is used to making proteins for systemic application, somultiple sclerosis makes a lot of sense."Celtrix gets to keep a good percentage of the profits for theseindications," and retains all rights to the macular degeneration, whichcould be a $500 million annual indication, Walsh said. "A smallcompany like Celtrix doesn't have the resources to do (largerindications) itself. It was a question of getting the deal done, findingthe right partner."Genzyme is in Phase II trials with a tissue debridement product calledVianain, which removes dead tissue from burn and ulcer wounds, whileBetaKine promotes new tissue growth. "BetaKine therapy is a powerfuladdition to our tissue repair portfolio and will allow us to take acomprehensive approach to treating patients," said Greg Phelps,Genzyme's senior vice president.Last November, Celtrix entered into a cross-licensing patent agreementwith Genentech Inc., of South San Francisco. It gave Celtrix access toGenentech's process for producing recombinant compounds inbacteria, allowing the company to increase production of TGF-beta-2,which it discovered in pulverized cattle bones in 1983. Genentech hadthe right of first discussion to co-develop products in systemicapplications.Celtrix (NASDAQ:CTRX) stock closed at $5.63 Monday, down 13cents. Genzyme (NASDAQ:GENZ) was up 50 cents, closing at $26.75.n

-- Jim Shrine

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