Scios Nova announced Monday that it has reacquired the rightsto a recombinant human lung surfactant (hLS) licensed toGenentech Inc. in 1989.

Under the terms of the new deal, all rights to the recombinanthLS technology will be returned to Scios Nova, includingworldwide marketing and manufacturing rights. In return,Scios Nova issued common stock to Genentech, and uponmarketing approval, Scios Nova will again issue common stockand pay a royalty on sales of the product. Scios Nova would notdisclose exact financial arrangements of the deal.

According to company spokeswoman Kira Bacon, Scios Nova ofMountain View, Calif., now has the opportunity to find a newmarketing partner for the drug, which has been on hold inGenentech's product pipeline for several years.

John Lewicki, Scios Nova's vice president for research, toldBioWorld that Genentech was originally chosen by Scios (thenCalifornia Biotechnology Inc.) as its licensing partner in whatmay have been the first licensing deal between two biotechcompanies.

"It (hLS) wasn't a trivial product, and there were sometechnical issues relating to the product that we thought onlyGenentech had the ability to tackle," said Lewicki.

In August 1990, BioWorld reported that Cal Bio aimed to file aninvestigational new drug (IND) application for hLS in earlyJanuary 1991, and that clinical testing of the recombinantproduct was expected to take about two-and-a-half years.

Scios Nova is still in preclinical trials with the drug.

Lewicki said that although Genentech devoted the early yearsof the agreement to product scale-up and formulation -- issuesthat had been causing delays on the project at Cal Bio --internal changes at Genentech since then have changed theSouth San Francisco, Calif., company's approach to drugdevelopment.

"They (Genentech) have a significant product pipeline that hLSwas set in for some time, and when it became evident theyweren't going to pursue development of the drug, werenegotiated the rights," said Lewicki.

Lewicki said Scios Nova will likely wait until another partner isfound before entering the clinic.

"We 're confident that it's a good product," he said. "Two othercompanies have lung surfactants on the market which havehad substantial impact, but we think there is a real need for arecombinant product that would have obvious advantages overAbbott's bovine and Burrough's synthetic products."

According to Lewicki, Scios Nova is the only companydeveloping a recombinant lung surfactant.

Amy Berler, an analyst with Alex. Brown and Co. in New York,said Genentech has recently pulled out of other productdevelopment programs, including its t-PA (tissue plasminogenactivator) program with Telios Pharmaceuticals Inc. and aclinical partnership with CD4 for AIDS. "There has obviouslybeen a prioritization of programs at Genentech," she said.

Scios stock (NASDAQ:SCIO) was up 38 cents a share on Mondayto $8.25. Genentech (NYSE:GNE) was off 13 cents a share to$33.63.

-- Michelle Slade Associate Editor

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