Cytogen and Elan form partnership in new product-testing subsidiary

Targon aims at accelerated cancer drug development

Take Elan Corporation, a pharmaceutical company in Dublin, Ireland,seeking to spin off several investigational drugs to improve itsstrategic focus. Add Cytogen, a biotech drug firm in Princeton,NJ, with a proven talent for gaining Food and Drug Administrationapprovals. Combine the two and you have the formula for Targon,a new Cytogen subsidiary that will specialize in the developmentof new cancer agents.

Formed in September, Targon aims at capitalizing on the talentsof Elan and Cytogen to accelerate the global registration of oncologyproducts plucked from the two companies' portfolios of investigationaltherapies and radiopharmaceuticals.

Targon will initially be a wholly owned subsidiary of Cytogen.Elan invested $20 million in Cytogen in the form of $5 millionin common stock and $15 million in preferred stock, which willbe used to capitalize Targon. The preferred stock is convertible,giving Elan the right to 50% equity ownership in Targon in thefuture.

The two companies also contributed the brain trust to makeTargon run. Dr. Robert Maguire, Cytogen's vice president of medicalaffairs, was named executive vice president and chief scientificofficer. Michael Sember, Elan's vice president of planning, investment,and development, is CEO and chairman. The board of directors willinclude equal representation from Elan and Cytogen, in additionto members drawn from industry.

Targon will operate largely as a virtual company, especiallyin its early stages, according to Pam Murphy, Cytogen vice presidentof strategy and communications. Although some staff will be hired,the subsidiary will contract with Elan for formulation and manufacturingservices and with Cytogen for clinical, statistical, and regulatoryservices, she said.

Cytogen stands to benefit from the new subsidiary through servicefees earned by managing the clinical trials for Elan's two therapeuticcancer agents. Additional revenue is expected from contracts thatSember secures from outside companies to coordinate the testingand regulatory paperwork for their investigational agents, Murphysaid.

"As an emerging biopharmaceutical company with limitedaccess to capital, this strategic alliance makes very good sense,because it capitalizes on our existing core competency in thedevelopment of oncology products," she said.

This novel concept evolved after Elan acquired South San Francisco,CA-based Athena Neurosciences in July. The buyout led to a shiftin strategic emphasis, bringing Elan more in line with its newproperty's strength in neuropharmacology, Sember said. Among otherprojects, Athena is developing drugs that show promise in treatingAlzheimer's disease.

Two investigational chemotherapies discovered by Elan wereturned over to Targon for development, manufacturing, and worldwideregistration. EL 530 and 532 are classified as differentiationagents because they appear to have the ability to reverse thebiological mechanisms that make normal cells cancerous, Sembersaid.

The new subsidiary also allows Cytogen to move the developmentof Prostatec, Oncotec, and prostate-specific membrane antigen(PSMA) off the back burner, Murphy said. Prostatec is a technetium-99m-labeledversion of Cytogen's indium-labeled ProstaScint prostate cancerimaging agent. Prostatec is in preclinical development and requiresan investigational new drug application before human testing canbegin.

Oncotec and PSMA are also in early stages of development. Oncotecis a radiopharmaceutical derivative of OncoScint CR/OV designedfor scintimammography. PSMA has shown potential as prostate cancervaccine and in gene therapy. Basic research is still need to determinePSMA's clinical and commercial potential, Murphy said.