In a deal that underlines the rising popularity of combining devices and biologic materials, Corautus Genetics Inc. and Boston Scientific Corp. late Wednesday disclosed their alliance to develop a gene delivery technology for the treatment of cardiovascular disease in a deal that has a total potential of about $25 million for Corautus.

"We're going to develop a system that's not just a device and is not just a therapeutic product," Corautus CEO Richard Otto told BioWorld Today. "We're developing a product that I believe one day will be an out-patient therapy."

Boston Scientific, of Natick, Mass., acquired 10 percent of Corautus' equity on a fully diluted basis for $9 million and paid a $1 million license fee for certain Corautus intellectual property. Corautus could receive another $15 million via Boston Scientific's purchase of convertible debt if certain milestones are achieved.

In return, Boston Scientific obtains exclusive rights to distribute the product when approved. Corautus is the exclusive licensee from Rockville, Md.-based Human Genome Sciences Inc. of vascular endothelial growth factor 2 - called VEGF-2 - for use in gene therapy to treat vascular disease.

Corautus' stock (AMEX:CAQ) leaped on the news, rising $1.86 Thursday, or 61 percent, to close at $4.91. Corautus has about 7 million shares outstanding. Boston Scientific's stock (NYSE:BSX) fell 37 cents to close at $63.23.

The primary focus and initial work in the agreement is a Phase IIb trial involving delivery of the VEGF-2 gene to the heart by means of a catheter produced by Boston Scientific, the device being specifically designed for the delivery of genes. The catheter allows the delivery without deactivating the gene - a problem often seen with non-gene-specific catheters, the companies said.

Otto said prior studies in which the VEGF-2 gene was directly injected into patients' hearts produced positive results. The upcoming trial, which Corautus expects to begin by the end of the year, would be a fairly large, multicenter study. Otto said patients would be randomized into dose-escalating treatment groups that use the gene therapy combined with Boston Scientific's Stiletto catheter, or receive placebo. Boston Scientific will supply the catheters for the trial at no cost. The trial's primary endpoint would be a measure of increase in exercise tolerance via the production of therapeutic angiogenesis.

A secondary endpoint of the trial would be to measure, by means of nuclear perfusion imaging, a decrease in ischemic tissue and angina, primarily of the type unresponsive to conventional therapies, Corautus said.

Fred Colen, Boston Scientific's senior vice president and chief technology officer, said in a conference call, "We have been following this technology for several years, and we are increasingly impressed by its promise," particularly in its ability to produce a new generation of cardiovascular disease treatment.

Corautus, of San Diego, was formed through a merger of Genstar Therapeutics Corp. and Atlanta-based Vascular Genetics Inc. Otto spoke from his office at an incubator facility managed by the Georgia Institute of Technology, where he said company researchers were operating without much overhead. The merged company originally was called Autus Genetics Corp. (See BioWorld Today, Sept. 16, 2002.)

The new effort fits well with Boston Scientific's emphasis on interventional technologies for cardiovascular treatments. For Corautus, down the road the company could explore other therapeutic avenues for the VEGF-2 gene, including peripheral artery disease, Otto said. But for now, the company isn't straying from its initial path.

"We're going to stay tightly focused on this one," he added, pointing to various other treatments for cardiac disease such as surgery, pharmaceuticals and coated stents, among others. "We want to create another option."