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IMMUNEX WILL BE SOLE GM-CSF MARKETER IN U.S. IN RESTRUCTURED HOECHST DEAL; RIGHTS TO TUMOR NECROSIS FACTOR AND "BACKGROUND" RIGHTS TO PIXY-321 REGAINED

Executive Summary

Immunex will become the sole marketer of granulocyte- macrophage colony stimulating factor (GM-CSF) in the U.S. under an agreement with Hoechst announced July 23. Pending Federal Trade Commission approval of the deal, Immunex and Hoechst will continue to co-market Immunex' sargramostim GM- CSF under separate trade names (Leukine and Prokine) for use in autologous bone marrow transplants and in engraftment failures. Following FTC approval, Immunex will have exclusive marketing rights in the U.S. for its Leukine brand in exchange for "significantly increased royalties" to Hoechst. The agreement settles lawsuits filed by Immunex and Hoechst against each other earlier this year. Immunex sued Hoechst and its subsidiaries Behringwerke and Hoechst-Roussel Pharmaceuticals in April for breach of contract and unfair competition ("The Pink Sheet" April 6, T&G-9). Hoechst countersued in June, seeking to prevent Immunex from cutting off its supplies of GM-CSF ("The Pink Sheet" June 15, T&G-7). The two companies have dropped the suits and agreed not to file similar charges in the future. Immunex has continued to supply Hoechst with GM-CSF for the U.S. hospital market. The new agreement calls for Immunex to supply GM-CSF to Behringwerke for sale outside the U.S. Immunex also acquires exclusive rights to market GM-CSF in Japan and co-exclusive marketing rights in specified non-European countries. GM-CSF was approved in the U.S. in March 1991 ("The Pink Sheet" March 11, p. 16); a biological product registration application has been filed in the U.K., and that country has agreed to serve as rapporteur to the European Community. The deal appears to put Immunex back on track toward attaining profitability based on Leukine sales. First quarter GM-CSF sales tumbled to $3.4 mil., which Immunex claimed was a result of Hoechst's Prokine giveaways. Sales recovered somewhat to $6.5 mil. in the second quarter, Immunex said July 23, although they are still down from $8.4 mil. in the second quarter of 1991. Immunex and Hoechst "are cooperating in efforts to achieve expansion of the labeled indications for sargramostim in the U.S.," the companies noted. Immunex said the two firms were preparing to file for an indication for the treatment of chemotherapy-induced neutropenia later this year. Other GM-CSF indications under study include treatment of several cancers and AIDS-related illnesses. The agreement also covers rights to Immunex' tumor necrosis factor receptor and the GM-CSF/interleukin-3 fusion protein PIXY- 321. "In return for compensation," Immunex will have exclusive worldwide rights to TNF receptor, which is being developed as a treatment for sepsis. Hoechst formerly had rights outside of North America. Hoechst also will return "background" rights to the PIXY-321 patent that would have allowed Hoechst independently to develop related compounds, Immunex said. While Immunex said it did not believe Hoechst was likely to exercise those rights, the new agreement assures Immunex' new PIXY-321 partner, Bristol-Myers Squibb, of exclusive overseas rights to the compound ("The Pink Sheet" Feb. 3, p. 6). The agreement marks the second time Immunex and Hoechst have restructured their 1985 R&D collaboration. In September 1989, Immunex traded overseas rights to IL-1 and IL-4 receptors for U.S. comarketing rights to GM-CSF, which was previously licensed exclusively to Hoechst worldwide. The deal will have a short-term impact on results for Immunex of about $8 mil., the company estimated, although that amount could be made up by increased GM-CSF sales. Specifically, Immunex will pay a fee for international rights to TNF receptor and forego a scheduled $3 mil. milestone payment for development of the sepsis treatment. Hoechst-Roussel said the restructured agreement will allow it to "reconcentrate on strategic areas." The firm noted that Prokine was its only oncologic product and that other agents it expected to have in the pipeline when it licensed GM-CSF did not materialize.

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