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Executive Summary

SYNTEX/SYNERGEN CNS JOINT VENTURE: $15 MIL. FROM SYNTEX for start-up funding will pave the way for a total commitment of up to $50 mil. for the collaborative development of nerve cell regeneration factors for Alzheimer's disease, Parkinson's, peripheral neuropathies "and other serious neurological conditions." Syntex and Synergen announced the creation of the joint venture on Feb. 7. Under the agreement, Syntex initially will provide $15 mil. in first-phase funding, with an option to contribute $35 mil. more for the clinical development of joint venture products. If Syntex contributes the $35 mil. for second-phase funding, the agreement gives the drug firm warrants to purchase 750,000 shares of Synergen common at an undisclosed agreed-upon price. Development costs above $50 mil. will be shared as will any joint venture revenues. Synergen's contributions to the joint venture are basic Fibroblast Growth Factor (bFGF), Ciliary Neurotrophic Factor (CNTF), which it recently cloned, and Parkinson's Factor. Syntex is contributing Nerve Growth Factor (NGF) technology. Synergen's bFGF is in preclinicals for neurological conditions, including Alzheimer's. The protein is further along in development for wound healing studies; bFGF is in Phase II for the treatment of topical ulcers and other wound healing with results expected in the summer. The agreement with Syntex is only for the neurological indications. CNTF is in preclinicals for the treatment of peripheral neuropathies and the Parkinson's Factor is at the developmental research stage. Syntex has been working on the NGF technology for several years. The joint venture will be managed cooperatively, with each firm participating "actively" in preclinical and clinical development, the firms said. Synergen has product co-promotion and co-detailing rights in the U.S. and Canada; Syntex controls the North American marketing rights and has exclusive rights in Latin America (except Mexico) and the rest of the world. Synergen will manufacture the proteins for the joint venture products. Syntex has made nine previous agreements with biotechs under its Biotech Venture Program, begun in 1984. The program's mission is small investments in a broad array of biotech firms, through equity investments, joint ventures or straight funding. Immunex, Genetics Institute, and T Cell Sciences are among its current biotech partners. The Syntex joint venture is not a first for Synergen either. The Boulder, Colorado-based firm initiated a major collaborative effort in May 1989 with Hoffmann-La Roche to develop its interleukin-1 inhibitor for inflammatory and autoimmune diseases such as rheumatoid arthritis. Roche is working on oral analogs of IL-li. Synergen also has a development agreement for genetically-engineered anti-plaque enzymes with the National Institute of Dental Research. Outside the pharmaceutical field, the company has longstanding collaborative agreements with Lilly for animal vaccines and Getty Scientific (Texaco) for biopolymers. While continuing to seek funding through partnerships, Synergen also is actively pursuing its own product development path. The biotech also announced Sept. 7 that it has regained from Ciba-Geigy rights to its human elastase inhibitor (SLPI) for the treatment of emphysema and other respiratory conditions for development by Synergen Development Partners Limited. Under the agreement, Synergen made an upfront cash payment to Ciba-Geigy and agreed to future payments from sales and royalties of products containing SLPI. In return, Synergen regained worldwide rights to the "program, use of preclinical and formulation information developed" by Ciba and "sufficient quantities of the pure protein to complete ongoing toxicologic studies" and begin clinical trials. Clinicals are expected to begin in "early 1991," Synergen said. Synergen's sponsored R&D budget through the first nine months of 1989 was $4.4 mil. with an almost equal amount ( $4.3 mil.) expended on proprietary R&D. The burn-rate through nine months was $10.8 mil. The company had cash-on-hand of $31 mil. as of Sept. 30, 1989.

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