Baxter Healthcare Corp. said it will begin Phase I tests thissummer of its blood substitute, with a goal of entering Phase IIstudies of the hemoglobin-based product in the fourth quarter.

The Deerfield, Ill., company's substitute is a solution ofhemoglobin taken from red blood cells collected from donors.The solution of cross-linked hemoglobin is stripped of any cellremnants or antigens and undergoes a patented viralinactivation process. Outdated blood cells can be used to makethe product.

Competitor Somatogen Inc. (NASDAQ:SMTG), which is producinga cross-linked human hemoglobin in E. coli bacteria, hasalready started Phase I tests. Tom Schmitz, general manager ofBaxter's blood substitutes program, said his company's producthas a potentially lower price tag because the cross-linking iscarried out by "a fairly simple chemical process" rather than bygenetic engineering.

The company estimates that the worldwide market for bloodsubstitutes will exceed $2 billion by the year 2000. -- RobertaFriedman, Ph.D.

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