Subject: Genetics Institute and Genentech Agree To Cross-License Drug for Hemophiliacs 
Date: Published: 3/22/89 (76 lines)
Source:  Wall Street Journal.  Copyright Dow Jones & Co. Inc. 

    Technology:  
    Genetics Institute and Genentech Agree
    To Cross-License Drug for Hemophiliacs
    ----   
    By David Stipp
    Staff Reporter of The Wall Street Journal

    Genetics Institute Inc. and Genentech Inc. agreed to
 cross-license their rival versions of an experimental drug
 for hemophiliacs that is expected to become one of
 biotechnology's biggest sellers.
    The agreement on the drug, called Factor VIII, also covers
 Baxter International Inc., Genetics Institute's partner in
 developing the drug, and Miles Inc., a unit of Bayer AG of
 West Germany, which is Genentech's partner on Factor VIII. 
    The pact means that the companies "will compete in the
 marketplace instead of the courtroom" in patent disputes on
 Factor VIII, said Gabriel Schmergel, Genetics Institute's
 president and chief executive officer.  Analysts said the
 agreement also should help build investor confidence in the
 biotechnology industry, in which patent fights have clouded
 many players' prospects.
    "We may be seeing the pattern changing from slugging it
 out to sharing rights" in biotechnology, said Linda Miller,
 an analyst with PaineWebber Inc. She added that two similar
 accords recently have been reached between rivals developing
 the genetically engineered drugs interleukin-2 and GM-CSF,
 immune stimulants being tested against cancer and other
 diseases.
    The agreement is especially important to Genetics
 Institute, which is counting on income from Factor VIII to
 help it reach profitability in the early 1990s, analysts
 said.  In national over-the-counter trading yesterday,
 Genetics Institute, of Cambridge, Mass., closed at $21 a
 share, up 50 cents.  Genentech, of South San Francisco, closed
 unchanged at $18.625 in New York Stock Exchange composite
 trading.
    Terms of the pact weren't disclosed, but the two companies
 and their partners have agreed not to challenge each other's
 patents on the drug.  They will continue to work independently
 on their own versions of the drug.
    Factor VIII is a blood component necessary for clotting
 that most hemophiliacs don't have.  They now use a version of
 the drug purified from human blood, but many of them have
 contracted AIDS and other blood-borne diseases from it.
 Improved purification has lessened that problem;
 genetically-engineered Factor VIII promises to eliminate it
 completely.  The new drug's expected introduction in the early
 1990s should expand use of Factor VIII, perhaps doubling its
 world-wide market of about $500 million, according to some
 analysts.
    An estimated 30,000 hemophiliacs world-wide must be
 treated with Factor VIII. But some 85% of them now have
 antibodies to the AIDS virus in their blood, said Stuart
 Weisbrod, an analyst with Prudential-Bache Securities.  Thus,
 many hemophiliacs may die of AIDS within the next few years,
 before the new Factor VIII drug reaches the market.  Many
 uncertainties remain, however, about the rate of AIDS
 contraction in hemophiliacs, analysts said.
    In any case, the latest agreement will give Genetics
 Institute and Genentech a dominant position in the market for
 genetically engineered Factor VIII, analysts said.  Last July,
 Genetics Institute won a U. S. patent on its Factor VIII
 technology.  Genentech hasn't received a similar patent but
 "probably has a better position in Europe than Genetics
 Institute does" for getting a Factor VIII patent there, said
 Mr. Weisbrod.

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