Schering-Plough Corp. intends to develop and market a unique interferon identified at Human Genome Sciences Inc., marking the first time another company has licensed a protein discovered by the Rockville-based drug developer.
Human Genome said yesterday that it will get "modest" payments from Schering-Plough as that company reaches milestones in the testing of the interferon, one of a family of proteins important in modulating the immune system. Human Genome also stands to get royalties from the sales of any related drug Schering-Plough puts on the market.
The royalties will be a percentage of sales "in the high single digits," said Arthur M. Mandell, Human Genome's senior vice president for corporate development.
But Human Genome hopes the greatest immediate value to the company will come as investors and other companies realize the import of the announcement. The company sees Schering-Plough's decision as proof that the systematic way Humane Genome goes about investigating the body's genes and proteins to discover drugs has earned credibility.
"We view this as yet another validation of the gene-based drug-discovery paradigm pioneered by Human Genome Sciences," Chief Executive Officer William A. Haseltine said of Schering-Plough's decision.
Using the method, the company first found the chemical recipes for thousands of human genes that produce proteins regulating the behavior of organs and cells. It uses the recipes to make samples of the proteins and tests the proteins to discover their potential uses as medicines. The method is in contrast to traditional drug-discovery methodology, which involves finding a single drug candidate that might work and proceeding to test it.
Janney Montgomery Scott analyst Heather D. Morris said Schering-Plough's decision "provides external validation of what they're doing in terms of drug discovery" at Human Genome.
Lehman Brothers analyst Joseph P. Dougherty said the announcement was particularly noteworthy because it involved Schering-Plough, a company experienced in bringing an interferon drug to market.
Interferons are related proteins that help cells fight infection by signaling genes to produce other infection-fighting proteins. Some companies have made and marketed forms of interferon to fight autoimmune diseases such as multiple sclerosis, as well as hepatitis and certain cancers.
Schering-Plough, for example, markets a form of interferon under the name Intron A to help fight chronic hepatitis B and C, diseases marked by liver inflammation. Intron A injections are marketed with Schering-Plough's Rebetol capsules in a combination therapy for chronic hepatitis C known as Rebetron. The combination has been a key reason sales of Schering-Plough's anti-infective and anti-cancer products rose 38 percent last year to $1.7 billion. Sales of the Rebetron combination alone totaled $1.1 billion, up 56 percent from 1998.
"We currently are the leader of the interferon market," Schering-Plough spokeswoman Dana Bicsko said. The decision to license the new form of interferon from Human Genome carries with it the "potential to complement the franchise Schering-Plough has in interferon."
Money-losing biotechnology companies commonly license drugs to other companies to ensure that they have cash coming in while they spend heavily to develop other drugs. Human Genome's 1996 agreement with Schering-Plough, based in Madison, N.J., calls for the Rockville company to give Schering-Plough two Human Genome-discovered proteins to develop and market. But Mandell said Human Genome's drug-discovery methodology is bringing in so many candidates for drug development that he has felt "overwhelmed with the possibilities for drugs."
Mandell said Human Genome chose the interferon to offer to Schering-Plough because interferon has been complex to bring to market. Interferon, discovered in 1957, was hailed in the 1970s as a potential cure for immune-system problems but turned out to be fraught with problems, including side effects ranging from fatigue and flu-like aches to depression.
"We were looking at the complexities in the animal experiments and in production," Mandell said. The interferon, he said, looked like "a protein best optimized in the hands of the experts. Schering-Plough was one of those experts."
Human Genome has four experimental drugs in various phases of human testing now, and it could have as many as four more in clinical trials over the next year.