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Executive Summary

SANDOZ $300 MIL. DEAL WITH SCRIPPS GIVES FIRM FIRST RIGHTS to all of Scripps Research Institute's "medical discoveries" starting in 1997, Sandoz announced Dec. 3. The 10-year agreement, which begins in January, calls for Sandoz and Scripps to collaborate on a number of specific research projects during a phase-in period lasting from 1993 to 1997. Sandoz will pay La Jolla, Calif.-based Scripps $300 mil. over the 10 years in annual payments. Sandoz will also pay royalties on any products resulting from the collaboration. The agreement includes an option to renew for another six years. Johnson & Johnson currently has first rights to Scripps research for human and vertebrate therapeutic and diagnostic discoveries under a $70 mil. agreement signed in 1982 and extended in 1987. That deal expires in 1996. Among Scripps products developed by J&J is the hairy-cell leukemia drug Leustatin (2CdA), for which an NDA is pending, and two marketed diagnostics for Epstein-Barr virus and cytomegalovirus. J&J and Scripps are also collaborating on a synthetic lung surfactant and an antitissue factor antibody for sepsis, J&J said. "Scripps' unique expertise lies in the fields of immunology, central nervous system disorders and cardiovascular diseases," Sandoz said. "These parallel Sandoz' main areas of focus." "The accord represents a significant expansion of Sandoz' research capacity," the Swiss firm stated. Scripps "is the nation's largest independent, non-profit biomedical research center" with a staff of approximately 650 PhDs and MDs. Scripps' 1992 operating budget is approximately $122 mil., about 75% of which is federally funded with the remainder coming from industry and private foundations. Sandoz' worldwide research operations employ 4,000 people. Specific research targets were not disclosed. "The landmark agreement builds on close collaboration, with long-term research programs managed by a joint scientific council," Sandoz said. "In addition, Sandoz researchers will engage in scientific projects with Scripps' scientists." Sandoz added that "once the program has reached its full scope, Sandoz' and Scripps' scientists will contribute to a great number of common research projects." Scripps President Richard Lerner, MD, said: "After considering a number of companies, we decided that Sandoz would be the ideal fit. Sandoz has deep roots in chemistry and biomedical science, and, as this partnership illustrates, the company is willing to break new ground in innovative research alliances." The Scripps deal is Sandoz' second with a major academic research organization. In 1991, the firm entered a $100 mil. 10- year collaboration with the Dana-Farber Cancer Institute in Boston ("The Pink Sheet" March 11, 1991, T&G-4). Sandoz also has been active in partnering with biotech companies. In announcing the Scripps agreement, Sandoz highlighted "its expansion in transplantation and gene therapy" through its acquisition of Palo Alto-based SyStemix and its collaborations with Gaithersburg, Md.-based Genetic Therapy Inc. and Boston-based Bio-Transplant. Sandoz' $392 mil. acquisition of 60% of SyStemix in December 1991 is the centerpiece of the firm's ongoing $1 bil. "Innovascan" biotechnology investment program ("The Pink Sheet" Dec. 23, 1991, p. 3).

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