Celltech Group plc announced that it has entered into anagreement with Bayer AG worth $47.8 million (26 millionpounds) to develop and market a monoclonal antibody directedat tumor necrosis factor to treat septic shock.

Both companies have been developing anti-TNF monoclonals.Celltech's humanized MAb will begin Phase I studies within thenext few weeks in three European countries.

Bayer's mouse MAb, licensed from Chiron Corp., is in Phase IIItrials in the U.S. and Europe, and Bayer plans to file for U.S.marketing approval by the end of this year, said Chironspokesman Larry Kurtz.

TNF and interleukin-1 are believed to be the first chemicalmessengers released by the body after an outside eventtriggers a series of reactions in the body. The resultinginflammatory cascade can result in organ failure and death.

"This means that whatever the cause of septic shock, our agentshould still be effective," said John Berriman, Celltech'sbusiness development director. "And since this agent will nodoubt be expensive, it's a comfort to the physician to know thatat least it will work."

Celltech will receive $47.8 million in milestone payments. Noequity investment is involved.

Under the agreement, Bayer will be responsible for clinicaldevelopment of Celltech's MAb after Phase I trials arecompleted, and anticipates filing for marketing approval in1995 or 1996.

Celltech of Slough, England, will market its product in certainEuropean Community countries and Bayer will have exclusiverights in the rest of the world. Celltech also will receiveroyalties on Bayer's sales.

The deal covers the injectable formulation of Celltech'santibody for all indications, and the companies plan to explorenew indications in the area of autoimmune disease.

The agreement allies Celltech with its most logical marketingpartner and avoids possible patent disputes.

"Bayer are going to be on the market first with an anti-TNF andthey will develop a franchise," Berriman told BioWorld. "Thenwe're going to come along with a better agent. We can eitherfight it out with them or do something sensible. As a smallcompany, we are always going to license, at least in the U.S. andJapan. A deal with Bayer was always going to be the best deal."

Both Celltech and Bayer, through Chiron, hold important patentrights. According to Kurtz, Chiron has exclusive rights to twovery strong Rockefeller University patents on all mouse orhuman TNF antibodies, while Celltech has a patent on makinghuman TNF antibodies. "So in licensing the Celltech patent,Bayer has created a barrier on anybody else entering themarketplace with a TNF antibody," Kurtz said.

Kurtz said that in addition to the patent issues, factors thatmade the Celltech/Bayer deal a plus for Chiron are Bayer'simplied vote of confidence in TNF for shock and futureroyalties to Chiron from the deal. Chiron will receive royaltieson Bayer's sales of Celltech's anti-TNF MAb.

"This shows Bayer is already thinking about the value ofhaving a second-generation TNF antibody," he said. "Ours is amouse monoclonal, and we recognize the marketing issues thatarise from a mouse antibody, even though there's no efficacyissue in the shock setting. We believe it reflects Bayer'soptimism that TNF has a role in septic shock."

Kurtz also said that Chiron received a $1.5 million benchmarkpayment from Bayer in April based on a positive interimreview of the Phase III data.

Cowen & Co. analyst David Stone estimated Chiron's royaltyfrom the Celltech product at 8 percent to 9 percent, comparedwith a 10 percent to 12 percent royalty on the mouse antibody.

Shares of Emeryville, Calif.-based Chiron (NASDAQ:CHIR)climbed $1.50 to $49.

-- Karen Bernstein BioWorld Staff

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