American Home Products Corp. and Alza Corp. have signed anagreement to develop and market pharmaceutical productsusing Alza's proprietary drug delivery systems.

The agreement is a cash deal and "is a very long-termarrangement," said John Skuls, AHP's vice president ofcorporate affairs.

Alza shares (AMEX:AZA) jumped $1.50 to $77.50 on theannouncement.

AHP and Alza will jointly select a large number of off-patent,generic drugs that appear most promising for use with Alza'sdrug delivery systems, including oral, transdermal andelectrotransport technologies, Skuls said. The resulting products"will be protected under Alza's patented technologies," he toldBioWorld. "We are hoping some products could be approved asearly as 1996."

Alza will be responsible for determining technical and clinicalfeasibility for non-clinical product development, which will befunded by AHP, and for manufacturing. The Wyeth-AyerstDivision of AHP will direct clinical development andregistration of products and worldwide introductory marketing.

AHP will have exclusive worldwide marketing rights until itmakes certain milestone payments based on product sales,after which Alza will have co-marketing rights with Wyeth-Ayerst. AHP's royalty payments will be in the 5 percent to 12percent range, said Alza spokeswoman Laura Mills.

"We are looking to become the preeminent company in thebiotechnology field, and this is just another development tounderscore our commitment to research and marketing," Skulssaid.

In September, AHP (NYSE:AHP) reached an agreement toacquire at least 60 percent of Genetics Institute Inc.(NASDAQ:GENI).

-- Kris Herbst BioWorld Washington Bureau

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