Interneuron Pharmaceuticals Inc. has entered into acollaboration with Ohio University to isolate, grow andgenetically engineer yolk sac stem cells.

The technology, which is in very basic research, has potentialapplications in treating certain cancers and immune systemdiseases, including use in bone marrow transplants. But humanuses are very far off, said Dr. Morris Laster of The Castle Group,which brought Interneuron and the university together.

The mammalian embryonic yolk sac stem cells are theprecursors to the bone marrow stem cells being developed bySyStemix Inc. (NASDAQ:STMX), Applied Immune Sciences Inc.(NASDAQ:AISX), CellPro Inc. (NASDAQ:CPRO) and BaxterHealthcare Corp., said Laster.

The university's technology for extracting and growing the cellsis different from the technology used by the bone marrow stemcell developers, he said.

To develop the technology, Interneuron is setting up asubsidiary at the university's Innovation Center. Lexington,Mass.-based Interneuron (NASDAQ:IPIC) will own at least 70percent of the subsidiary.

The research will be led by Thomas Wagner of the Athensuniversity's Edison Animal Biotechnology Center. Wagnerdeveloped the first transgenic animal, a pig, in the early 1980s,said Laster.

Interneuron is developing products to treat central nervoussystem disorders. The company originally thought thetechnology would have CNS applications, but now believes theywould be very long-term, said Charles Casamento, presidentand chief executive.

Interneuron shares closed at $12.50 Monday, down $1. --Karen Bernstein

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