Telios Pharmaceuticals Inc. announced Monday that it hassigned a research agreement with pharmaceutical giant Eli Lillyand Co. to develop, test and market integrin-specificcompounds for preventing and treating osteoporosis.

Speaking at Hambrecht & Quist's 11th Annual Life SciencesConference in San Francisco, Telios (NASDAQ:TLIO) alsoannounced the results of its recently completed multicenterclinical trials on TelioDerm, an adhesion peptide that acts as aprovisional matrix to accelerate tissue regeneration, fortreating chronic dermal ulcers.

In its agreement with Telios, Lilly will provide at least $1.5million annually in research funding for up to four years. Aswell, Lilly will acquire 500,000 shares of Telios common stockfor $4 million, giving it less than 2.5 percent equity in the SanDiego company, said Audrey Keane, director of corporatedevelopment.

Telios will also get license fees for achieving clinical andregulatory milestones. Lilly will take any products into theclinic, and has worldwide marketing and sales rights. But Teliosretains the manufacturing rights for the active ingredient,Keane said, and also gets royalties on product sales.

Telios is developing therapeutics based on the role of theextracellular matrix -- a meshwork of proteins and othercompounds that surrounds most cells -- in disease and tissuerepair. Besides osteoporosis, the disease targets for Telios'products include fibrotic diseases, cardiovascular diseases,ophthalmic wounds, and severe and chronic dermal wounds.

In the latter area, Telios has completed multicenter clinicaltrials on TelioDerm. The company reported trial results lastmonth in its secondary offering prospectus. The companyenrolled 65 patients in its placebo-controlled trial for chroniculcers associated with diabetes. Of the 51 patients whocompleted the trial, 44 percent in the group receivingTelioDerm were completed healed, compared with 11 percentof the controls. In addition, TelioDerm reduced the surface areaof the ulcers an average of 79 percent, whereas the placeboreduced the surface area by 30 percent. Telios also tried itscompound in 216 patients with venous stasis ulcers. Because astatistically significant difference was not shown with respectto all patients healed, Telios is planning another trial in thesepatients with a "treatment regimen believed to be moreoptimal."

Telios had a $15 million collaborative agreement withGenentech Inc. of South San Francisco, Calif., dating from 1991to develop an anti-coagulant based on short peptides to blockplatelet aggregation. Last October, however, Genentechreturned the rights to that drug to Telios. Although Teliosintends to file that drug's investigational new drug applicationitself, it's "still looking for a partner to step into Genentech'sshoes," said Keane.

Last March, Telios raised $20 million in its scaled-down initialpublic offering of 2.5 million shares of common stock at $8.

The company's stock was up 75 cents a share on Monday, to$7.75.

-- Jennifer Van Brunt Senior Editor

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

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