It's the kind of scientific breakthrough biotechnology companies dream about: a discovery that could lead to the development of a drug for treating the common cold.
Agouron Pharmaceuticals' announcement March 11 that it had discovered the structure of an enzyme critical to reproduction of viruses that frequently cause colds boosted its profile on Wall Street. The research breakthrough was one of a series of successes that have driven up Agouron's market value 21.3% since Dec. 31. The company's stock closed at $14.25 in Friday's trading on Nasdaq.
The discovery does not ensure that Agouron will develop an effective cold-fighting drug--that won't be known for several years at least. Still, the prospect of having a blockbuster in sight has created lots of excitement at the company, whose researchers are also working on treatments to combat AIDS, cancer and other diseases.
"There is a very strong and exhilarating sensation that the technology . . . we set out to develop a decade ago is beginning to boil to the surface in some dramatic ways," said Peter Johnson, Agouron's president and chief executive.
The discovery is "potentially very important," said Jim McCamant, the Berkeley-based editor of Medical Technology Stock Letter. "One of the intriguing things is that it provides the promise of a solution to a medical problem that has been insolvable."
Another analyst who likes Agouron, Ed Hurwitz of Smith Barney Shearson in San Francisco, recently wrote that it is "one of the most undervalued and overlooked companies in the biotechnology industry."
That is high praise for a company without a drug on the market and none nearing Food and Drug Administration approval. But industry observers say Agouron's recent announcement is all the more impressive because it follows several recent successes in research and corporate strategy.
Last month, Agouron announced a key financing agreement with the pharmaceutical division of Japan Tobacco Inc. under which it would double its maximum investment in Agouron to more than $56 million, provided certain research milestones are met. Japan Tobacco, which already owns 2% of the firm, is a diversified company based in Japan with $23 billion in annual revenue.
The agreement will provide funding for research on drugs to treat and prevent common upper respiratory infections, hepatitis C and herpes. Japan Tobacco will gain exclusive marketing rights to the drugs in Japan, Taiwan and South Korea.
Significantly, however, Agouron retained exclusive worldwide marketing rights to the anti-rhinoviral drugs--those for treating colds and other upper respiratory ailments.
The La Jolla-based firm was also able to negotiate a highly favorable deal with research partner Eli Lilly late last year involving drugs for fighting HIV, the AIDS virus. Lilly handed over to Agouron all worldwide commercial rights to its anti-HIV drugs in exchange for receiving proprietary details of Agouron's recent discovery related to the common cold.
The deal means that the much larger Lilly will become a competitor of Agouron in the race to develop a treatment for colds and other respiratory ailments. Nevertheless, Johnson said he was delighted by the agreement. "While we don't underestimate Lilly," he said, "we have a great deal of expertise and are quite comfortable with our ability to compete successfully.'
The agreements with Japan Tobacco and Lilly are significant because they enable Agouron to reap broader commercial benefits--that is, profit--if it can bring new drugs to market. More commonly, young biotechnology firms sacrifice commercial rights to their partners, usually big drug companies, in exchange for financing or research assistance.
Agouron is considered one of the leaders in developing a new class of AIDS drugs known as protease inhibitors, which aim to stop HIV from producing an enzyme key to its replication. "We believe they are the most potent anti-HIV agents in the world," Johnson said.
Possibly, but the drugs haven't yet been tested on humans. The company hopes to begin first-phase clinical trials--the first of several steps to drug approval, dealing only with safety and dosage--later this year. Drug maker Hoffman-La Roche recently began the first large-scale human studies of a protease inhibitor for use against HIV.
Further along in development are several anti-cancer drugs, which are just completing first-phase trials in the United States and Europe. In a separate project, Agouron is working with pharmaceutical giant Schering-Plough Corp. on another cancer-related research project.
To be sure, Agouron's drug development process has not always worked. In mid-1993, the company suspended development of an anti-psoriasis therapy after it proved ineffective in human clinical studies. The psoriasis treatment worked in a similar manner to attack the skin disorder as do Agouron's cancer drugs. But company officials say they remain confident that the anti-cancer drugs can be effective.