Human Genome Sciences Inc. has granted Genentech Inc. an exclusiveoption to license a newly-discovered gene to determine if it hasadvantages as compared with Genentech's highly touted drug,Pulmozyme.Pulmozyme has been approved for sale as a treatment for cysticfibrosis, and has reported successful Phase II trials as a treatment forchronic bronchitis.The option is for Human Genome's (NASDAQ:HGSI) new humanHeart/Lung Selective DNAse (HL-DNAse) gene and recombinantDNA products derived from the gene. The company has filed a patenton the full gene.The agreement with Genentech (NYSE:GNE) marks the first timeHuman Genome has outlicensed a gene released back to it byPhiladelphia-based SmithKline Beecham under a licensing agreementsigned in May, 1992. Under the $125-million agreement, HumanGenome gave SmithKline first rights to many therapeutic, vaccine anddiagnostic products developed through the collaboration in the area ofhuman genes. In exchange for giving up the rights to HL-DNAse,SmithKline will get a share of any option payments Human Genomereceives from Genentech and of any future licensing revenues such asmilestone payments or royalties, according to William Haseltine,Human Genome's chief executive officer.Haseltine would not disclose the specific terms of his company'sagreement with Genentech. The option must be exercised within aspecified period of time.Because the new gene is expressed in the heart and lungs, it may have abetter therapeutic profile for the treatment of obstructive lung diseasesthan Pulmozyme, which is made from DNAse expressed in thepancreas and salivary glands, Haseltine told BioWorld."We are pleased that Genentech has taken this option. They are anatural partner for us because they have all the requisites to do thepreclinical evaluation and appropriate clinical testing for this product,"Haseltine said.Geoff Teeter, Genentech's manager of corporate communications, saidit is too early to say whether HL-DNAse could prove to be an adjunctor substitute for Pulmozyme. He noted that this judgment would haveto wait until the company's scientists have examined it in thelaboratory. "We are pleased to be working with Human Genome and toevaluate their HL-DNAse under this agreement," Teeter said.The agreement with Genentech marks an important step for HumanGenome. The company has been battling investor concerns that it'sagreement with SmithKline may have deprived Human Genome ofvaluable licensing and marketing opportunities.The company also hopes that the speed with which the gene wasidentified and tied to a potentially valuable therapeutic use willovercome doubts about its business strategy. Instead of targeting genesfor specific diseases, the company's strategy is to use sophisticatedgene sequencing technology to discover as many gene sequences aspossible, as rapidly as possible, and identify those that have potentialtherapeutic value. HL-DNAse was first discovered in a collaborativeeffort with The Institute for Genomic Research, an independent, non-profit institution which the company supports. Human Genome'sscientists then fully sequenced it, expressed an active protein andwithin a month identified it as a new human gene that might be acandidate for the treatment of obstructive lung disease.

-- Philippa Maister

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