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Executive Summary

GENETIC THERAPY, INC.'s FOURTH GENE THERAPY TRIAL should begin by the end of the summer, according to National Institutes of Health Molecular Hematology Branch Chief W. French Anderson, MD. On Feb. 4, NIH's Recombinant DNA Advisory Committee approved a protocol submitted by St. Jude's Children's Research Hospital to use marker genes to study the efficacy of autologous bone marrow transplantation in childhood leukeumia patients. The protocol was approved by FDA on June 14 and awaits the formal approval of NIH Director Bernadine Healy, MD. Gaithersburg, Md.-based Genetic Therapy, Inc. will provide the viral vectors that introduce the genes ex vivo into target cells, which are then reintroduced into the body, the company said in a May 21 preliminary prospectus for an initial public offering. The marker genes will tell investigators if the reinfused bone marrow contributes to relapses. Cell harvesting has already begun, Anderson said. GTI's offering, underwritten by First Boston and Montgomery Securities, could net the company as much as $ 29.9 mil. The company will offer 2 mil. shares, plus 300,000 for overallotments, at a proposed maximum price of $ 13 per share. Proceeds are slated for R&D, the development of larger-scale production capabilities and general corporate purposes. A successful offering would provide sufficient operating capital through the end of 1993, the company said. GTI has provided the vectors for all three human gene therapy trials. The first trial, begun in May 1989, introduced marker genes into tumor infiltrating lymphocytes (TIL) in 10 patients. A second trial began in September 1990 for treating the ADA enzyme deficiency in one patient. "A second patient entered this protocol in January 1991," the prospectus says, "and additional patients are expected to be treated in 1991." In January, a trial began using TIL altered to secrete tumor necrosis factor (TNF) in two patients ("The Pink Sheet" Feb. 4, T&G-7). The prospectus notes: "At this stage in the protocol, issues have arisen with respect to the introduction into TIL cells of the TNF vector. However, research on optimization of this process is in progress." The difficulty apparently was responsible for a delay in initiating the trial in January and has slowed the trial's expansion. The approved protocol was for up to 50 patients. Two new patients have been enrolled since the prospectus was filed; one patient began therapy May 25 and the other on June 6, Anderson said. More will begin soon, he added. GTI has four Cooperative Research and Development Agreements (CRADAs) with various NIH laboratories and is negotiating with Pulmonary Branch Chief Ronald Crystal, MD, for a fifth CRADA in treating emphysema, cystic fibrosis and lung cancer, the prospectus notes. The "most important and longest standing" CRADA is with Anderson for a broad range of gene therapy research, the prospectus says. Anderson is committed to contributing 50% of his time to the CRADA and is a lead researcher for each of the company's other CRADA's, the prospectus notes. GTI also has CRADAs with Deputy Branch Chief of Metabolism Michael Blaese, MD, for the ADA trials, with NCI's Tumor Cell Biology Lab Chief Robert Gallo, MD, for soluble CD4 AIDS research, and with Clinical Hematology Branch Chief Arthur Nienhuis, MD, for research in hemoglobinopathies (e.g., sickle cell anemia). "The company does not expect to be able to commercialize any products in the near future," the prospectus says, and any products that do result from GTI's technology face an uncertain path to commercialization. "The precise regulatory requirements with which the company will have to comply [as a commercialized supplier of vectors] are uncertain at this time due to the novelty of the human gene therapies currently under development," the prospectus notes. An FDA guidance on the subject is under preparation. Center for Biologics Evaluation and Research Director Gerald Quinnan, MD, noted at a June 26 International Biotechnology Conference meeting in Baltimore that a new "points to consider" document for gene therapy would be ready "very soon." Moreover, the company holds no patents, although it has an exclusive license to three patent applications filed by NIH, the prospectus notes. The company also has "no proprietary rights to genes used in gene therapy," and so "will be required to obtain licenses . . . in order to market vectors containing any of these genes." GTI is in negotiations with respect to some of the genes, the prospectus says. Genetic Therapy, Inc. was founded in May 1986 and has raised a total of approximately $ 10.5 mil. via four private placements. GTI President and CEO James Barrett, PhD, is a former president of Life Technologies, Inc., and exec with SmithKline Beckman. VP- Research and Development Paul Tolstoshev, PhD, was formerly with Biotechnology Australia Pty., Ltd. and Transgene. Three of the company's top scientists came from NIH: Clinical Director Robert Moen, PhD, was with the Laboratory of Molecular Hematology, while lab directors Martin Eglitis, PhD, and Daniel Kuebbing, PhD, worked with Anderson.

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