Chiron Corp. and Cephalon Inc. on Monday announced acollaborative agreement that will initially focus on developingCephalon's human insulin-like growth factor (IGF-1) for thetreatment of amyotrophic lateral sclerosis (ALS).

Chiron and Cephalon will work together to research, developand market products to treat neurological disorders. Inaddition to IGF-1, trademarked Myotrophin, the companies alsowill develop Chiron's human superoxide dismutase (hSOD),basic fibroblast growth factor (bFGF) and Cardioxane.

IGF-1, a naturally occurring hormone, is currently in PhaseII/III trials for ALS, and Cephalon plans to begin Phase IItrials for treating certain neuropathies later this year. Chiron(NASDAQ:CHIR) of Emeryville, Calif., is conducting or plans toconduct trials of IGF-1 for treatment of tissue wasting, kidneyfunction and other degenerative and metabolic diseases.

Chiron has conducted a Phase III study of superoxidedismutase in kidney transplant patients following reperfusionand is currently analyzing the data for long-term kidneysurvival. Cardioxane is currently marketed in Europe as anadjunct therapy to mitigate cardiac side effects in cancerpatients undergoing treatment with doxorubicin. Chironobtained European rights to Cardioxane through its acquisitionof Cetus Corp., which had licensed the rights from Adria Labs.

bFGF is one of a series of growth factors for topical wound-healing that Chiron is developing under a collaborativeagreement with Johnson & Johnson, which has rights only tothe wound healing indication. Chiron will now pursuedevelopment of bFGF for neurological diseases with Cephalon.

Cephalon (NASDAQ:CEPH) of West Chester, Pa., is focused solelyon development of diagnostic and therapeutic agents fordiseases of the nervous system. The company has several othercompounds in preclinicals for such indications as stroke, headand spinal cord injury and Alzheimer's disease.

In 1990, Cephalon signed a five-year, $20 million agreementwith Schering-Plough Corp. for developing treatments forAlzheimer's disease. In addition, the company has a 1993agreement with SmithKline Beecham for developing calpaininhibitors for treatment of neurological damage caused bystroke. It also has agreements with Kyowa Hakko and Kogyo Co.Ltd. for developing and marketing Myotrophin in Japan and fordevelopment of neurotrophic small molecules, called receptortyrosine kinase (RTK) effectors, for head and spinal injury.

Under the Chiron-Cephalon agreement, the two companies willshare equally certain costs and profits throughout the life ofthe collaboration in North America and Western Europe. Chironwill be responsible primarily for selling products resultingfrom the collaboration in North America and Europe, andCephalon will have the right to promote and sell the productsdirectly to neurologists. Elsewhere, except in Japan, Chiron willcommercialize the products and pay a royalty to Cephalon.

Chiron will be responsible for manufacturing IGF-1 and othercompounds in the collaboration, although Cephalon willcontinue to manufacture it for ongoing clinical trials and hasthe option to participate in manufacturing of the compound forcommercial purposes if Chiron is unable to meet manufacturingrequirements. The companies will jointly establish clinical andmarketing strategies and budgets, and Cephalon will conductongoing clinical trials.

As part of the agreement, Chiron will purchase 750,000 sharesof Cephalon common stock and warrants to purchase anadditional 750,000 shares for an aggregate price of $15 million.Cephalon's executive vice president, Bruce Peacock, said that ifChiron exercises the warrants, it will have less than a 10percent stake in Cephalon.

In a separate announcement, Chiron said it is renaming itsCetus Oncology and EuroCetus European oncology businessesChiron Therapeutics. The name change "reflects the increasingscope of Chiron's therapeutic interests, the company's desire toexpand the value of name recognition across its severalbusiness units and its continued efforts to streamlineoperations since the 1991 acquisition of Cetus Corp. by Chiron,"the company said.

Chiron Therapeutics will market products that evolve fromChiron's collaborations with Viagene Inc., Onyx Pharmaceuticalsand Lynx Therapeutics.

On Monday Cephalon's stock was down 25 cents a share, closingat $18.50, while Chiron's stock was up $3.25 a share, closing at$86.75.

-- Brenda Sandburg News Editor

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