Alkermes Inc. could realize up to $20 million from Johnson &Johnson following a decision by the pharmaceutical company tocontinue clinical development of an undisclosed drug with Alkermes'Medisorb sustained release delivery system.

Medisorb involves encapsulation of small-molecule compounds inpolymers similar to dissolving sutures. The therapeutic solution isreleased gradually as the polymeric microspheres erode, significantlyreducing the number of injections a patient receives.

Alkermes, of Cambridge, Mass., acquired the delivery system in itspurchase of Medisorb Technologies International L.P., of Cincinnati,in March 1996 for $4 million. Medisorb was formed in 1990 as alimited partnership between Stolle Medical Products Inc., ofCincinnati, and E.I. du Pont de Nemours Co., of Wilmington, Del.

Johnson & Johnson subsidiary, Janssen Pharmaceutica N.V., ofBeerse, Belgium, was working with Medisorb Technologies on thedrug delivery system prior to Alkermes' acquisition of the product.Johnson & Johnson is headquartered in New Brunswick, N.J.

Alkermes' CEO Richard Pops said Janssen decided to continueclinical development of its drug with Medisorb following completionof a Phase I study conducted by Alkermes.

Johnson & Johnson, which has not disclosed the drug or the diseasetargeted, agreed to pay Alkermes up to $20 million over two yearsbased on the product's progress.

Alkermes' other drug delivery system, ProLease, employs polymerssimilar to Medisorb. However, ProLease can deliver proteins as wellas small-molecule compounds for sustained release.

Alkermes has ProLease collaborations with Genentech Inc., of SouthSan Francisco, Schering-Plough Corp., of Madison, N.J., andBoehringer Mannheim GmbH, of Mannheim, Germany.

Alkermes also is developing drug delivery vehicles to ferry small-molecule drugs through the hard-to-cross blood-brain barrier.

The company's stock (NASDAQ:ALKS) closed Friday down 50cents to $12.50. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.