By Frances Bishopp

In its second major corporate collaboration since April, NeoRx Corp. has entered into an agreement with Johnson & Johnson subsidiary Janssen Pharmaceutica N.V. for the worldwide development, manufacture and distribution of NeoRx's Avicidin cancer therapy product in a deal valued at more than $60 million.

Avicidin is a radioimmunotherapy product designed to deliver high doses of radiation to metastatic tumors and to minimize the exposure of normal tissues, especially bone marrow. Avicidin is in Phase I/II clinical trials and has produced tumor regression in patients with advanced colon, ovarian and prostate cancers that were not responsive to standard therapies.

Under the agreement, NeoRx, of Seattle, receives $10 million up front, of which 50 percent is for the purchase of equity, and may receive up to an additional $50 million in payments for achieving certain milestones. Johnson & Johnson Development Corp. will purchase $5 million of NeoRx convertible preferred stock that will convert to NeoRx common stock at $6 per share in the event the average closing price, as determined in accordance with the stock purchase agreement, equals or exceeds $6 per share, or if no such conversion occurs prior, on Aug. 8, 1998, at the then average closing price.

Janssen, of Beerse, Belgium, has agreed to assume responsibility for registration and commercialization of the product and to fund an estimated 95 percent of the remaining costs for product development and clinical trials.

In exchange, Johnson & Johnson, of New Brunswick, N.J., receives a worldwide exclusive license to Avicidin and the right of first negotiation to subsequent oncology products employing the company's Pretarget technology. Additional oncology products that fall under this agreement will trigger royalty obligations and may result in additional milestone payments to NeoRx. NeoRx has retained broad development and marketing rights for the Pretarget technology.

Short of the $60 million for up-front and milestone payments, the overall amount of the deal could not be disclosed, Paul Abrams, president and CEO of NeoRx, told BioWorld Today. He did, however, report the current deal was worth more than the agreement NeoRx entered into in April 1997, worth up to $60 million, with Schwarz Pharma A.G. covering NeoRx's Biostent product, a combination drug/device for the treatment of restenosis following balloon angioplasty.

Pretarget technology involves the separate administration of an antibody that targets tumors and a therapeutic agent that joins the antibody at metastatic tumor sites within the body. By separating injections, exposure of normal tissue to the therapeutic is reduced and the efficacy of the therapy may be enhanced.

"We use a military analogy," Abrams said. "The conventional approach is the guided missile, with the antibody carrying the payload. The pretarget approach is the laser, where you paint the tumor and the toxic molecule comes in separately. By giving the toxic molecule separately, we have been able to demonstrate a substantial improvement in the safety-efficacy profile. Because of this we have been able to give much higher doses than has been given with the conventional approach."

In addition to the $60 million and Janssen picking up 95 percent of the product development costs and clinical trials, Abrams said, NeoRx has retained the right to copromote the product with Janssen in the U.S.

As of June 31, 1997, NeoRx had $30.5 million in cash and short-term investments. NeoRx's stock (NASDAQ:NERX) closed Tuesday at $5.125, up $0.688. *