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Executive Summary

GENSIA ARA RESEARCH ATTRACTS $15 MIL. FROM MARION MERRELL DOW to support development of the adenosine regulating agents (ARAs for cardiovascular and cerebrovascular diseases. Under Gensia's first R&D partnership agreement, announced Feb. 7, Marion Merrell Dow will acquire a 15.9% equity position in the firm for $15 mil. and will obtain exclusive U.S. and European manufacturing and marketing rights to any orally active ARA products that it develops. The ARAs are a class of purine/pyrimidine compounds. Gensia's lead purine compound, ARA-100, is in Phase II clinicals for cardiovascular disease in the U.K.; others are in preclinical testing. The agreement provides Marion Merrell Dow the option to purchase an additional $5 mil. in Gensia stock within three years. Marion Merrell Dow will also make milestone payments to Gensia for each compound licensed and will pay royalties on any product marketed. The U.K. testing of ARA-100 is being funded in part by the $10.6 mil. raised by Gensia in a recently completed round of venture capital financing ("The Pink Sheet" Sept. 18, 1989, T&G-11). The investment in Gensia offers Marion Merrell Dow a new avenue of exploration in the cardiovascular field, where the company is well-established with the Cardizem line. Cardiovascular disease has been an area of emphasis for the Merrell Dow research organization. Among the in-development products in that area is Perfan, an injectable cardio-stimulant, introduced in Europe in 1988. Gensia will continue to have responsibility for preclinical work on the ARA compounds while Marion Merrell Dow will handle clinical development and regulatory filings for oral forms. Gensia will retain manufacturing, marketing and comarketing rights for parenteral products covered by the agreement. Commenting on its plans for the parenteral market, Gensia President David Hale said: "The development, manufacturing and marketing of parenteral products for acute care in the hospital has been a core strategy of Gensia since the company's inception. The physician office-based market for oral drugs to treat cardiovascular and cerebrovascular diseases is best served by a major pharmaceutical company." The $15 mil. commitment from Marion Merrell Dow brings to over $41 mil. the amount of capital Gensia has raised to support its biopharmaceutical R&D work since the start- up was founded in 1986. An earlier co-development deal with KabiVitrum for one of Gensia's purine based compounds fell through in January 1989, because the companies could not agree on final terms, according to Gensia. Separately, Gensia announced it had signed agreements with Protocol Systems and Graphic Controls for the development and manufacture of its combination ESA drug/device system. The system is based on a proprietary drug (exercise stimulating agent) that causes the heart to beat faster under controlled conditions. The agreement with Protocol Systems provides for the development and long-term supply of the ESA System device. The deal with Graphic Controls, signed in 1989, provides for the supply of electrodes to administer the ESA Drug to patients through "transdermal iontophoresis" or "non-invasive delivery of drugs through the skin using a small amount of electrical current," according to Gensia. The company completed four Phase I clinical trials of the ESA System in West Germany and the U.K. in 1989 and Phase II trials in cardiovascular patients have begun in West Germany.

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