Up-and-Comer Regeneron Has Amgen Backing : Biotech: The Thousand Oaks manufacturer is betting that the small Tarrytown, N.Y., company will develop new, effective drugs.

Regeneron Pharmaceuticals Inc., which caused a splash on Wall Street when it went public recently, hopes one day to be the next Amgen Inc.--that is, the next blockbuster biotechnology company. And Amgen hopes Regeneron becomes the next Amgen.

That’s because Amgen, based in Thousand Oaks, is a major partner in the effort by 3-year-old Regeneron to develop and market biotechnology-based drugs that would combat Parkinson’s disease, Alzheimer’s disease and other neurological ailments.

Amgen, which had sales of $241.7 million in the nine months ended Dec. 31, has invested $18.5 million in Regeneron--and that may rise to $53 million over the next five years. At the moment, Amgen has a 7% voting stake in Tarrytown, N.Y.-based Regeneron.

The companies also have a joint-venture deal to market in the United States any neurological drugs based on Regeneron’s technology, with each sharing the profit. The deal allows Amgen to market the drugs in Europe. Amgen would be Regeneron’s major manufacturer if any of the drugs are approved for sale.

Regeneron is now just a research-and-development firm--roughly the same stage of development as Amgen a few years ago. The company says sales of its proposed drugs are years away--if they ever reach market.

Regardless, the Regeneron pact enables Amgen to stake its claim on the future of neurological drugs, whose potential Amgen and biotechnology analysts see as enormous. About 6 million Americans suffer from Alzheimer’s and other neuro-degenerative diseases. Patients have few therapeutic aids, and no biotechnology drugs have been developed to treat them.

“It’s a very large market that’s not under-served--it’s not served at all. What Amgen is saying is, ‘We’re on track; we needed to identify this next big area and ensure we will be a participant,’ ” said David K. Stone, a biotechnology analyst for Cowen & Co. in Boston.

“It’s one of the most significant markets for biotechnology drugs,” said Lowell E. Sears, Amgen’s chief financial officer. “It’s a field with substantial commercial potential and potential for alleviating human suffering.”

Amgen, which has brought two biotechnology drugs to market, is perhaps years away from marketing another. The Regeneron deal is not intended to fill that gap, because Regeneron’s products are even farther from approval than those Amgen is developing, said James McCamant, editor of the Medical Technology Stock Letter.

The Regeneron deal is Amgen’s “way of making a commitment to the neuroscience field,” he said. Nonetheless, Amgen “in the next 12 months will either acquire a couple more products or eventually acquire one of the smaller biotechnology companies” to fill that hole in its product line, McCamant predicted.

Amgen’s Sears confirmed that his company is looking at more product acquisitions, either in the form of licensing technology or buying products outright. He declined to be specific.

Amgen has the resources to finance such deals. Besides cash from its strong sales growth, it could use stock, which has soared from $21.50 a share early last year to its closing price Monday of $132 in national over-the-counter trading (adjusted for a 2-for-1 split last summer).

Regeneron is a long way from that kind of success. Still, it made headlines two weeks ago by selling 4.5 million common shares to the public for $22 apiece, netting $92.4 million for the company after underwriting costs.

The stock quickly fell back--it closed Monday at $16.125 a share on the over-the-counter market--amid Wall Street rumblings that its lead underwriter, Merrill Lynch & Co., overpriced the initial offering.

The stock’s current price puts a value on Regeneron of about $248 million. Not bad for a company that probably won’t have earnings until the mid-1990s.

The stock offering signaled that investors, influenced by Amgen’s success, are still willing to shift capital to fledgling biotechnology companies.

Citing Securities and Exchange Commission rules on new stock offerings, Regeneron executives declined comment.

Regeneron says its drugs would attempt to slow the death of nerve cells that cause neurological diseases. That would involve giving patients manufactured clones of the brain’s “nerve growth factors,” proteins that help keep nerve cells healthy. In other words, the company would try to perform nerve regeneration--hence its name.

In biotechnology, scientists splice together genes--which contain the blueprints of most forms of life--to reproduce, or clone, substances in laboratories so they can be used to treat ailments.

Regeneron says it has cloned some proteins in the lab and identified their relation to various nerve cells in the body. It still must do more biological tests, then start testing the drugs on animals.

Human trials are a year or two away. Regeneron and Amgen must also design ways to manufacture enough of the drugs to use in the trials.

Amgen, which has been working on neurological drugs, approached Regeneron about a joint venture because “they were on a fast track” toward developing the drugs, Sears said.

There’s no guarantee that Regeneron will get its drugs to market first, however. In its stock prospectus, it noted that several competitors, including Genentech Inc., Synergen Inc. and Cephalon Inc., are developing similar drugs.

But Amgen is a big plus in Regeneron’s corner. It gives Regeneron a capability to develop, manufacture and market its drugs, and it can help guide it through the regulatory process.

Will Regeneron be the next Amgen? Sears isn’t making predictions.