ImClone Systems Inc. on Tuesday announced that it hasentered into a $35 million strategic alliance with Japanese giantChugai Pharmaceutical Co. Ltd to develop blood cell growthfactors that target a receptor, termed FLK-2, found ontotipotent stem cells.

ImClone (NASDAQ:IMCL) of New York, will receive up to $35million for research support and the successful completion ofmilestones up to and including product approval in Japan.Chugai will have exclusive manufacturing and marketing rightsin Japan and certain other Far East countries, while ImCloneretains the rights elsewhere.

"ImClone will provide the driving force behind the research onthe product over the next three years, including characterizingthe protein and doing all the preclinical work," said HarlanWaksal, the company's executive vice president and chiefoperating officer. At that point, Chugai will take the productthrough clinical trials and the regulatory approval process inJapan, while ImClone will do the same in the U.S.

ImClone intends to use its own funds to manufacture andmarket the product, although the agreement with Chugaidoesn't prevent it from seeking a partner for this purpose,Waksal told BioWorld.

"About half of Chugai's $35 million is going to research supportfor the first three years," Waksal said. After that comemilestone payments to ImClone based on Chugai's entrance intoand progression through clinicals, he added. "It's actually asimple deal. ImClone gets the research support from a partnerthat understands this field" and has been successful at bringingproducts to market, especially the blood cell growth factorserythropoietin (EPO) and granulocyte-colony stimulating factor(G-CSF). And, Waksal added, Chugai gets another drug for itsarsenal.

The FLK-2 receptor is found on cells believed to be theprogenitors to the blood and immune cell system. Growthfactors directed at FLK-2 may be able to reconstitute entire cellpopulations that are often destroyed through chemotherapyand radiation therapy. In addition, growth factors aimed at thisreceptor may have applications in bone marrowtransplantations and various blood disorders.

ImClone scientists have already identified and are currentlyisolating a naturally occurring protein that binds to and mayact as a blood growth factor for cells that company scientistsbelieve are totipotent stem cells (totipotent stem cell factor, orT-SCF).

Also, ImClone scientists and their collaborators at PrincetonUniversity have cloned, expressed and purified the murineFLK-2 receptor gene, which binds to the candidate T-SCF andappears to play a role in cell proliferation. In November,ImClone received a notice of allowance for the U.S. patent onthis gene, to which the company has an exclusive license fromthe assignee, Princeton.

"A totipotent stem cell product resulting from this alliancecould create synergistic effects with our EPO and G-CSF," saidOsamu Nagayama, president of Chugai Pharmaceutical. Chugai'smajor Japanese competitor for both EPO and G-CSF -- and in thedrug business overall -- seems to be Kirin Brewery Co., also ofTokyo. According to a report in the Wall Street Journal, Kirin's1992 sales of G-CSF in Japan were 21 billion yen (US$168million), compared to Chugai's estimated sales of $104 million.Analysts expect 1992 sales of Kirin's top two drugs to reach$320 million, topping by about $16 million sales of similarproducts by Chugai.

ImClone is also developing cancer vaccines, one of which,MelVax, is in Phase I clinical trials for treating melanoma. Aswell, it is developing products to treat inflammatory diseaseand vaccines for infectious diseases. And last December,ImClone licensed its entire diagnostic technology to AbbottLaboratories, in a move that was designed to allow ImClone to"concentrate on our therapeutics and move forward in theareas of cancer and hematology," according to Samuel Waksal,president and chief executive officer.

ImClone's stock closed Tuesday at $12, down $2 a share.

-- Jennifer Van Brunt Senior Editor

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