One of the state's small-but-promising biotechnology firms got a major boost yesterday, as Genetic Therapy Inc. of Gaithersburg announced a deal under which Sandoz Pharma Ltd. will invest up to $35 million in Genetic Therapy's research efforts.
"The approach of GTI is rather unique," said David L. Winter, vice president of scientific and external affairs for Sandoz Pharmaceutical Corp., the Swiss drug giant's East Hanover, N.J.-based U.S. affiliate. "It's one we want to stay abreast of and want to be involved with. In our opinion, it's better to do it with them than to start it on our own."
Sandoz has already bought $10 million worth of stock in Genetic Therapy, which went public in July, Genetic Therapy Chief Financial Officer Marc R. Schneebaum said.
The two companies announced the stock purchase yesterday and also said that Sandoz will put $13.5 million into three joint research projects of Sandoz's choosing.
In addition, the companies said that Sandoz will pump $11.5 million more into Genetic Therapy if certain conditions are met. Neither side disclosed the conditions.
Genetic Therapy said the research projects will try to develop therapies for immunologic disorders and inflammation (including asthma), cancer and cardiovascular disease. But Dr. Winter said there is no guarantee that any of the research will spin off successful products.
"We're really talking about basic research," he said. "We're in the high-tech business, and it's high risk. You try to make your best guesstimate on the skills of the individuals involved."
In exchange for the money, Sandoz gets exclusive worldwide licensing rights to technology developed in the jointly funded research. However, Genetic Therapy will get royalties on the products that Sandoz sells.
Such arrangements are common in the biotechnology industry, where promising science and lack of the financial muscle needed to bring new drugs to market are equally common.
Dr. Winter said that the average new drug takes 10 years of research and development and that the process on average costs more than $200 million.
Arrangements like the Genetic Therapy-Sandoz deal are often described as a necessary evil: Biotech entrepreneurs bemoan the fact that they have to give up control over their technology but say that without access to deep-pocketed financial partners they couldn't finish developing their products.
Genetic Therapy's stock closed yesterday at $13.875, up 87 1/2 cents, in over-the-counter trading. Sandoz paid $21.26 a share.
GTI's stock was driven down in last week's broad decline in the markets.