Genentech, Biogen to Collaborate on Drug

Biotechnology rivals Genentech Inc. and Biogen Inc. said Tuesday that they would collaborate on a possible treatment for autoimmune diseases such as rheumatoid arthritis and lupus.

Financial details weren’t disclosed. The deal “forges an important R&D; partnership between the companies,” Jennifer Chao of RBC Capital Markets said in a research note.

The companies said they would co-develop a biotech drug that blocks BR3, a protein that plays a role in rheumatoid arthritis and lupus, painful disorders that affect the joints and other organs.

The BR3 protein was identified by Biogen, but both companies have been racing to develop a drug that blocks its action.

Neither firm has a drug for rheumatoid arthritis, a disease that has created a large market for biotech medications. Drugs made by Amgen Inc., Abbott Laboratories and Johnson & Johnson could have combined sales of $3 billion this year.

Genentech, in collaboration with Idec Pharmaceuticals Corp. of San Diego, has been testing the cancer drug Rituxan in rheumatoid arthritis patients. Genentech, based in South San Francisco, recently announced that its experimental psoriasis drug Raptiva did not help rheumatoid arthritis patients.

There are no biotech drugs for lupus, which is managed with steroids.

Biogen, based in Cambridge, Mass., markets biotech drugs for multiple sclerosis and psoriasis and thus is a would-be competitor to Genentech. Analysts expect Food and Drug Administration approval of Raptiva this year.

Biogen is completing a small test of a BR3 drug in humans. As part of the deal, Genentech will conduct a second phase of human tests. After that, Biogen has the right to opt in and proceed with Genentech toward FDA approval. The deal gives potentially lucrative North American marketing rights to Genentech and leaves Biogen with other territories.

Genentech’s shares touched $77.50, a 52-week high, before closing up $1.77 at $76.37 on the New York Stock Exchange. Biogen fell $1.14 to $46.96 on Nasdaq.