Advanced Polymer Systems Inc. said Monday that it has signeda $24 million license agreement with Ortho PharmaceuticalCorp. to develop retinoid-based products using APS'sMicrosponge delivery system.

The agreement provides Ortho with exclusive distribution orlicense rights for all Ortho retinoid products using theMicrosponge system. Ortho currently markets Retin-A, an off-patent product to treat acne. In April, an FDA advisorycommittee recommended approval of a second retinoidproduct, Renova, for anti-aging and anti-wrinkling indications.

The Microsponge system uses sponges no bigger than a particleof talc for the controlled release of ingredients in thepharmaceutical, cosmetic and personal care areas.

APS of Redwood City, Calif., is conducting Phase III trials of aretinoid product using Microsponge to treat acne. Thetechnology reduces the irritation associated with the treatmentby ensuring that not too much drug gets to the skin at any onetime, said Bennett Weintraub, controller.

"We decided that the best way to commercialize the productwas to license it to Ortho," Weintraub said. APS plans to file formarketing approval by the first quarter of 1993.

APS shares (NASDAQ:APOS) rose $1.50 to $11.75 on Monday.

Ortho, a Johnson & Johnson subsidiary, has paid a $2 millionlicense fee to APS. In addition, Johnson & Johnson DevelopmentCorp. purchased for $4 million 354,767 newly issued APSshares for $11.28 per share, giving J&J a 2.8 percent equityholding. APS has 12.5 million shares outstanding.

Subject to the completion of certain clinical work, in SeptemberOrtho will make an additional $4 million license payment andJ&J Development Corp. will buy an undetermined number ofAPS shares for an additional $4 million.

Total milestone payments would add $10 million to the deal. Inaddition, the company will receive royalties on sales. A portionof the fees will be credited against Ortho's future royaltyobligations.

-- Karen Bernstein BioWorld Staff

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