Advanced Tissue Sciences Inc. (ATS) announced Monday that ithas signed an agreement potentially worth $39 million withKirin Brewery Co. to develop a stem cell proliferation factor(SCPF) and grant to Kirin license options to commercialize SCPFand related technologies in Asia, on which ATS would receiveroyalties.

ATS will receive as much as $29 million from Kirin in paymentsfor up-front fees, research funding and milestone payments; ifKirin exercises its options on ATS's bone marrow culturetechnology, the La Jolla, Calif., company (NASDAQ:ATIS) couldget another $10 million. From these monies, "ATS will realize$4 million this year," according to Janet Wahl, the company'sdirector of corporate communications.

Thus, while Kirin gets rights to develop SCPF in Asia, ATS hasretained the rights in the rest of the world, and it's looking foranother partner to develop those, Wahl told BioWorld. "We arestill focusing on developing our core technology," she said."We're not getting into the business of developing growthfactors and SCPF." ATS itself will use the growth factor for "ourown tissue engineering technologies," Wahl said.

ATS acquired the worldwide rights to SCPF from the Universityof Florida Research Foundation, Inc. last December. Researchersat that institution announced data on the growth factor inDecember at the American Society of Hematology Meeting inAnaheim, Calif. The data described the ability of SCPF toproliferate CD34-positive CD-38 negative cells, a subpopulationof hematopoietic cells believed to contain stem cells.

Since SCPF apparently stimulates the growth of hematopoieticstem cells, it could be used to reconstitute the cell populationsthat are often destroyed by chemotherapy or radiationtherapy. SCPF could also find use in bone marrow transplants,the treatment of chemotherapy patients and a variety of blooddisorders.

Wahl told BioWorld that the University of Florida ResearchFoundation researchers will update their findings on SCPF thisFriday in San Diego at a meeting on Recent Advances inHematopoietic Stem Cell Transplantation co-sponsored by theUniversity of California San Diego School of Medicine and theInternational Society for Hematotherapy and Graft Engineering.

The agreement with Kirin is ATS's second Japanese pact. In lateJanuary, ATS inked a preliminary agreement with MitsubishiKasei Corp. by which the Japanese company is evaluating ATS'sliving skin equivalent, DermaGraft, for taking through clinicaltrials in Japan.

ATS had $38 million in assets at the end of its third quarterlast October, Wahl said, and 29,261,053 shares outstanding,fully diluted.

The company's stock closed Monday at $10.75 a share, up 88cents.

-- Jennifer Van Brunt Senior Editor

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