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CETUS-ROCHE RAS ONCOGENE AGREEMENT IS THIRD COLLABORATION

Executive Summary

CETUS-ROCHE RAS ONCOGENE AGREEMENT IS THIRD COLLABORATION between the two firms announced within the last year. Emeryville, Calif.-based Cetus and Hoffmann-La Roche announced Sept. 27 that Roche will assist over a five-year period in funding R&D on ras oncogenes -- mutated forms of which are found in at least 30% of all human cancers. Roche will receive worldwide rights to market any products developed from the program. Cetus has co-marketing rights under certain conditions and will receive royalties. The program initially will attempt to identify the ras oncogene's mechanism of action. Cetus has two U.S. patents broadly protecting its ras oncogene discoveries, and 40 related patents are pending worldwide, the company says. The Cetus director of molecular biology, Frank McCormick, PhD, is the company's senior scientist in ras oncogene research. Cetus and Roche's most recent previous collaborative contract was concluded in February, when the firms entered a five-year agreement similar to the new oncogene deal for the development of human in vitro diagnostics based on Cetus' GeneAmp polymerase chain reaction (PCR) technology. The agreement calls for Roche to engage in R&D for in vitro diagnostic tests and to supply reagents used in those tests. From the agreement date through June 30, Roche had provided $ 1.6 mil. in funding. Prior to the GeneAmp agreement, Cetus and Roche agreed late last year not to challenge each other's patents on recombinant alfa interferon, Roche's IL-2 and Cetus PEG IL-2 ("The Pink Sheet" Jan. 2, T&G-5). As part of that agreement, Roche took an equity position in Cetus. That agreement was superseded in May by a provision under which Cetus sold Roche 950,000 shares of its common stock at $ 15 per ($ 14.25 mil. total) and issued Roche two warrants to purchase 1 mil. shares total of the company's common stock at $ 15.75 per share. According to a recent Cetus proxy, Roche beneficially owns 1.45 mil. shares of common, or a 5.11% stake in Cetus, including 500,000 shares subject to a $ 15.75 per share warrant which became exercisable in mid-August of this year.
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