Subject: Viagene Inc. Sells Rights for AIDS Drug To Japan's Green Cross for $40 Million 
Date: Published: 4/25/91 (82 lines)
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

    Technology & Medicine:
    Viagene Inc. Sells Rights for AIDS Drug
    To Japan's Green Cross for $40 Million
    ----
    By Sonia L. Nazario
    Staff Reporter of The Wall Street Journal

    Viagene Inc., a San Diego biotechnology company, said it
 signed a $40 million pact giving Japan's Green Cross Corp. 
 worldwide marketing rights for the AIDS drug it is developing
 and producing.
    The move is sure to rekindle fears that U. S. biotechnology
 companies are selling critical technologies to cash-flush
 Japanese concerns, possibly giving the Japanese a competitive
 edge.  Viagene is the latest in a string of biotech companies
 to get financing from a Japanese concern.
    "People in Congress and on Capitol Hill are concerned that
 some of our major advances in biotechnology are being taken
 over by the Japanese and European companies," said Pamela
 Bridgen, executive#irector of the Washington-based
 Association of Biotechnology Companies.  "There is the fear
 the U. S. will lose its lead in biotechnology the way we did
 with the electronics industry."
    Earlier this year, the President's Council on
 Competitiveness issued a report on biotechnology that voiced
 similar concerns.  And at a recent meeting on intellectual
 property in Japan sponsored by the National Academy of
 Sciences in the U. S., several top officers of biotech
 companies voiced concerns about Japanese investments.  The
 Japanese government, which has stated it wants 10% to 11% of
 its gross national product to come from biotech products, is
 promoting such efforts.
    But Robert T. Abbott, president and chief executive
 officer of Viagene, said that bringing a pharmaceutical to
 market costs on average $250 million and takes seven to 10
 years.  "If you can't find the investment to cure AIDS in the
 U. S., does that mean we shouldn't get the funds elsewhere to
 do it?" he asked.
    Under the agreement, about half of total profits will go
 to closely held Viagene, and the remainder to Osaka-based
 Green Cross, Mr. Abbott said.  A joint management committee
 with equal representation by both concerns will determine
 research strategy and budget levels.  Green Cross won't be
 involved in day-to-day operations of the company, which is
 conducting animal toxicity studies on its HIV
 Immuno-Therapeutic drug.  "This product has the capability of
 stimulating in animals killer t-cells," or those that are
 thought to fight cancers and viruses, Mr. Abbott said,
 although he noted the drug hasn't gone to human clinical
 trials, and no findings have been published in major science
 journals.
    The Viagene agreement is unusual because most previous
 marketing agreements allowed the U. S. firm to retain
 marketing rights to the drug in the U. S. Thus, this agreement
 "may signal a move by Japanese drug companies to market drugs
 in the U. S...."  said Mark D. Dibner, director of the
 biotechnology information division of the North Carolina
 Biotechnology Center.
    Cynthia Robbins-Roth, editor of BioVenture View newsletter
 in San Mateo, Calif., said U. S. biotechnology concerns are
 increasingly interested in Japanese investment because the
 Japanese take a longterm investment approach.
    About 12% of biotechnology joint venture agreements by
 U. S. companies are with Japanese concerns, Mr. Dibner said.
 "The basic research is flowing out of the U. S.," to Europe
 and Japan, he added.
    As the number and size of such agreements increase, there
 is concern that the U. S. is pumping money into biotechnology
 firms that later sell the rights to their product to Japanese
 concerns.
    Another concern is that international firms have an
 advantage in making such agreements because they don't have
 to pay U. S. taxes on them.

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