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Executive Summary

Cetus' joint venture with Ben Venue Labs will give the biotech firm a quick entry into the anticancer market with a line of generic products while Cetus pursues development of its DNA-derived biological response modifiers such as beta interferon, interleukin-2, and tumor necrosis factor. The 50-50 joint venture with Bedford, Ohio-based Ben Venue Labs will "formulate, manufacture, and market generic anticancer drugs worldwide," the two firms announced in a Sept. 24 joint press release. Under the partnership, to be called Cetus-Ben Venue Therapeutics, Cetus will market the products, while Ben Venue will be responsible for formulating and manufacturing activities, the two firms said. Privately-held Ben Venue "is the largest contract mfr. of single dose parenteral drugs in the U.S.," the release notes. The joint venture expects to market its first generic anticancer agent by the end of 1985, the release indicates. Cetus said that the partnership currently has one ANDA pending at FDA and will file several more shortly. The Ben Venue joint venture will also allow the Cetus therapeutic marketing arm time for seasoning in the next few years before Cetus' Betaseron (beta interferon) and interleukin-2 are ready for market introduction. Cetus is currently recruiting a hospital sales force to detail therapeutics. The biotech firm indicated that it foresees eventually building a pharmaceutical hospital detail force in the 70-100 person range. Joint Venture Will Give Cetus Experience In Cancer Marketing: Ben Venue Into New Product Development The joint venture "is an important step toward Cetus' primary objective of building a U.S. health care business," Cetus President Robert Fildes said. "lt allows us to develop a profitable near-term business and to build a hospital sales force and marketing capabilities in advance of the introduction of Cetus' proprietary therapeutic drugs." Specializing in small volume parenterals, Ben Venue has been involved in the development and manufacture of "a wide variety of sterile diagnostic and therapeutic agents for human and veterinary use," the release notes. The closely-held firm was founded in 1938 and has worked as a developer and contract mfr. of antitumor agents for the Natl. Cancer lnstitute since the 1960s, Ben Venue said. Both Ben Venue Labs and Cetus cited the Waxman/Hatch law for making the transition into the generic drug business possible. Ben Venue VP-Finance John Tramontana noted: "In recent years, Ben Venue has searched for ways to expand its business beyond development and contract manufacturing. With the passage of ]Waxman/Hatch[ we realized that we were in a position to use our technology and expertise in a more profitable way." In addition, Cetus noted that the generic share of the anticancer drug market, now estimated at 25%, should expand over the next five years. Cetus pointed out that "many significant anticancer drugs are already off patent and every major anticancer drug currently marketed will be off patent by 1988-89." Fildes added that the generic anticancer business also offers the firm "the opportunity to more rapidly establish an image for Cetus in the anticancer market. It represents a superb fit with what we expect ultimately will be our largest most profitable business, namely branded anticancer therapeutics developed via biotechnology, and results in obvious synergies from marketing classical drugs which may be used in combination with these biotechnology products." The lead compound in Cetus research is interleukin-2, which the firm says is "rapidly advancing through Phase II human clinical trials." In its recently released annual report for fiscal 1985 (ended June 30), Cetus said that 21 interleukin-2 clinical studies "were underway or completed by year-end involving up to 500 patients." The company said that eight additional Phase II trials will begin "shortly." In addition, Cetus said it is supplying "over 300 laboratories worldwide" with interleukin-2 for preclinical testing against a variety of diseases. To date, Cetus said that interleukin-2 has been "tolerated well in patients, and early responses have been seen with Kaposi's sarcoma, chronic leukemia, renal cell carcinoma, colon carcinoma, adenocarcinoma of the lung, chondosarcoma and melanoma patients in Phase I studies." In Phase II, the biotech firm plans to test interleukin-2 as a single therapeutic agent in various leukemias, lymphomas, solid tumors of the brain, colon, breast, ovary, kidney, skin and connective tissue and AlDS," the annual report notes. Cetus said it plans to test interleukin-2 in combination with "several traditional cancer chemotherapeutics," antivirals and interferons. The annual report points out that the firm received a composition-of-matter patent for its mutein form of interleukin-2 in May. Betaseron is also in Phase II testing. Cetus noted that "over 150 patients have been tested in 10 Phase I and II studies to date." Cetus reported that the protein is being tested for use in the treatment of melanoma, renal cell carcinoma and hairy cell leukemia, as well as several infectious diseases such as hepatitis, genital warts and common cold. In its 1984 annual report, Cetus said it was looking at intranasal delivery of beta interferon to treat cold and flu. Cetus is working on beta interferon under a joint development agreement with Shell Oil subsidiary Triton Biosciences. The biotech firm's recent annual report also provides updates on several other areas of its R&D program. Cetus' tumor necrosis factor (TNF) entered preclinical studies in 1985 and the firm is currently testing a series of TNF muteins to determine a candidate for clinical trials that "represents the best combination of enhanced activity and range of action." Cetus said it expects to file an IND "by early 1986." The company is also looking at several muteins of colony stimulating factor-1, which Cetus successfully cloned during FY 1985. Cetus said it expects to file an IND for colony stimulating factor-1, which Cetus successfully cloned during FY 1985. Cetus said it expects to file an IND for colony stimulating factor-1 muteins in 1986. Cetus also has two ongoing research programs in the area of monoclonal antibodies. In the company's program studying immunotoxins linked to monoclonal antibodies, Cetus said that during FY 1985 it was able to develop a genetically engineered toxin fragment that was superior to natural toxins in inhibiting human tumor growth in animal models. "We have identified the most promising of our breast cancer immunotoxins and are scaling them up in preparation for clinical development," the annual report states. "We expect to file for permission to begin human clinical trials by early 1986." The firm's immunotoxin research in ovarian cancer, bone marrow transplant, and pancreatic islet cell transplant is less advanced. In the area of human monoclonal antibodies to treat bacterial infections, the firm said it has developed several human monoclonals that "selectively bind to and neutralize" endotoxins from a range of infection-causing bacteria in hospitals. Cetus said it expects to file an IND sometime in 1986. "At present," the annual report notes, "we are concentrating on the development of an efficient and reproducible manufacturing process to make products for clinical trials, on the preparation of a stable formulation, and on additional preclinical animal studies to obtain FDA approval for human trials." Despite spending $40.2 mil. on R&D in FY 1985, or approximately 70% of revenues, Cetus continues to hold a strong cash position. As of June 30, Cetus reported having $85.2 mil. in cash and short term investments. In addition, Cetus estimated that its financial assets and funding arrangements provide the firm with an additional $125 mil., including $25 mil. in interest income, $13 mil. in notes receivable and $87 mil. from external funding sources. These external funding sources in the health care area include the firm's R&D partnership, Cetus Healthcare limited Partnership, and Triton, which together still have $33 mil. available to Cetus for R&D.

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