Applied Microbiology Inc. (AMI) and the Astra/Merck Groupannounced Thursday that they have entered into acollaborative agreement to jointly develop products thateradicate the Helicobacter pylori bacterium, which has beenimplicated in the development of peptic ulcers.

The agreement provides for royalty payments to AMI andestablishes marketing milestones for Astra/Merck; otherfinancial terms of the agreement were not disclosed.

Last month a consensus panel of the National Institutes ofHealth decided that H. pylori is the cause of peptic ulcers andrecommended that patients be treated with a combination ofantibiotics and bismuth (see BioWorld, Feb. 11). Thatannouncement may significantly affect sales of two of the top-selling drugs in the world -- Glaxo Holding's Zantac andSmithKline Beecham's Tagamet -- which are used to treat thediscomfort of peptic ulcers but do not eliminate the H. pyloribacteria.

AMI is currently conducting preclinical studies of Ambicin Nfor the eradication of H. pylori. The anti-microbial drug is nowsold under the brand name Consept as a topical disinfectant toprevent bovine mastitis. Under the New York company'sagreement with Astra/Merck, Ambicin N will be explored as apotential ulcer therapy when given in combination withomeprazole.

Omeprazole is sold by AB Astra in Sweden under the brandname Losec. The company licensed U.S. marketing rights to thedrug to Merck & Co. Inc., which sells it under the name Prilosec.It is a non-H2 histamine antagonist anti-secretory agentindicated for the short-term treatment of duodenal ulcer.

An Astra/Merck representative said the company is currentlyconducting pilot clinical trials to evaluate the efficacy ofomeprazole in combination with antibiotics such as amoxicillinor erythromycin against H. pylori. The company's collaborationwith AMI is a second approach, he said.

Astra/Merck's president, Wayne Yetter, noted that thecompany, which is currently owned by Merck & Co.,"anticipates becoming, in the near future, a 50-50 joint-venturecompany focusing on taking the pharmaceutical discoveries ofothers through the drug development process to themarketplace." Although the companies would not disclose thelength of their agreement, an Astra/Merck representative didsay the companies hope to collaborate long enough to bring aproduct through the regulatory process and to the pharmacy.

Astra/Merck and AMI are taking on some formidablecompetition in the race to find a combination therapy for pepticulcers. Glaxo, for example, is in Phase III development ofTritec, a drug that combines the active ingredient of Zantacwith a bismuth salt. The company is also exploring Zantac-antibiotic combination drugs.

AMI's stock (NASDAQ:AMBI) climbed 63 cents to close at $6.38per share on Thursday.

-- Karl A. Thiel Business Editor

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