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Rhone-Poulenc Buys Stake In Biotech Concern

June 3, 1993

NEW YORK (AP) _ Pharmaceutical maker Rhone-Poulenc Rorer Inc. will invest $113 million in a small California biotech concern specializing in sophisticated cell and gene therapies, the companies said Thursday.

The deal, which gives Rhone-Poulenc Rorer a 37 percent stake in Santa Clara-based Applied Immune Sciences Inc. as well as the option to acquire another 23 percent, is the latest example of a big drug company buying access to cutting-edge science.

In over-the-counter trading, AIS jumped $3.87 1/2 a share to $22.87 . Rhone-Poulenc Rorer slipped 50 cents to $52.87 1/2 a share in late trading on the New York Stock Exchange.

The newest technology involving cells ″moves from treating the symptoms (of a disease) with traditional pharmaceuticals to preventing or curing the disease,″ said Rhone-Poulenc Chairman and Chief Executive Robert Cawthorn at a news conference in New York.

Besides collaborating on cell therapy research and development, the two companies plan a global network of Cell Therapy Centers, where scientists and technicians will treat and alter cells so they can be reinfused into patients to strengthen their ability to fight crippling diseases like cancer and AIDS.

Rhone-Poulenc Rorer estimates an additional investment of up to $30 million to establish a network of nine centers worldwide over the next several years.

AIS already operates one center in San Francisco and plans another in Los Angeles early next year, said Thomas Okarma, the company’s chief executive.

But current cell processing at the center is done on a kind of clinical trial basis. AIS isn’t likely to receive approval to process cells as a commercial service for another three to five years, said Paul Boni, an analyst with the firm Mehta & Islay.

Using the tools of molecular biology and genetics, researchers at several companies are developing techniques that can isolate cells and alter their structure either by using drugs or inserting genes.

A sample of a patient’s blood is sent to a Cell Therapy Center, like a hospital for cells. There, cells culled from the blood are modified over several days or weeks, then returned for intravenous infusion into the patient.

The new, altered cells are expected to boost the immune system so the body can fight cancerous tumor cells and other diseases. Ultimately, cell therapy could make some pharmaceuticals obsolete.

″The future therapies are blueprints to program the body to heal itself,″ said Dr. Manfred Karobath, president of research and development at Rhone- Poulenc Rorer.

Cell therapy can also be used to teach cells to respond to a particular drug or to resist drugs. That could enhance the performance of some drugs Rhone-Poulenc Rorer is developing.

Last year Rhone-Poulenc Rorer decided to tighten its research and development focus, said Ken Kulju, an analyst with UBS Securities. ″They decided to get rid of the me-too-type products.″ The AIS collaboration ″compliments the work they’re doing in cancer and the infectious disease areas,″ he said.

One of the most prominent drugs in Rhone-Poulenc Rorer’s pipeline is Taxotere, which inhibits cell division in cancer patients and currently in clinical trials. The company also is developing a drug that stimulates an immune response in AIDS patients.

The AIS investment is part of Rhone-Poulenc Rorer’s strategy to enter collaborative agreements with academic and research institutions that involve the sophisticated medical techniques of the future.

For big drug companies, investing in biotech companies, which are more visionary and less bureaucratic, is often the fastest way of harnessing new technologies.

Earlier this week shareholders of Immunex Inc., a Seattle-based biotech concern, approved a merger with the American Cyanamid’s Lederle unit, which specializes in cancer treatments. American Cyanamid paid $350 million for a 54 percent stake.

In January, Sandoz Pharmaceuticals Corp. said it would provide $75 million to the Neurosciences Institute in exchange for first rights to discoveries related to the central nervous system.

American Home Products Corp. acquired a 60 percent stake in Genetics Institute Inc. last year for $666 million.

But the largest collaboration between a leading drug company and a biotech concern began in 1990, when Swiss-based Hoffman-LaRoche Ltd. bought a 60 percent stake in Genentech Inc. for $2.1 billion.

Rhone-Poulenc Rorer, with offices in Paris and Collegeville, Pa., reported 1992 sales of $4.1 billion. The company spent about $500 million on research and development.

AIS was founded in 1984 and went public in 1991. The company employs 150 people and spends about $8 million a year on research.

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