AMGEN, TULARIK ENTER INTO DEAL RIGHTS GAINED FOR CANCER DRUGS.

Byline: Evan Pondel Staff Writer

THOUSAND OAKS - Biotechnology behemoth Amgen Inc. has reached a $125 million deal with drug discovery company Tularik, potentially bolstering its arsenal of cancer-fighting drugs.

The cash and stock transaction entitles Amgen to exclusive commercialization rights and a 21.3 percent stake in Tularik. The agreement also includes up to $21 million payable to Tularik each time the San Francisco company reaches certain goals set forth in the contract.

``Tularik and Amgen share a common approach to drug discovery, and we were impressed by the quality of their programs,'' said Barbara Bronson Gray, spokeswoman for Amgen. ``This collaboration will help us expand our efforts in the area of cancer.''

So far, Amgen has attacked the symptoms of cancer through three drugs: Aranesp, Neulasta and Neupogen. Now, with Tularik on board, the company is furthering its agenda to capitalize on cancer-quashing therapies.

To do that, Amgen will purchase 3.5 million newly issued Tularik shares for $35 million, or $10 a share, while buying an additional $40 million in Tularik common stock during the next three years.

In return, Amgen will gain access to Tularik's Oncogene Discovery Program. An oncogene is a gene that normally directs cell growth. If an oncogene is altered, it can promote or in some cases allow the uncontrolled growth of cancer.

Founded in 1991, Tularik has been involved in the discovery of oncogenes as they are invaluable targets for anti-cancer drugs. The company has several cancer-related drugs in its pipeline that are currently administered intravenously. Of those drugs, T67 targets liver cancer and T607 is in clinical trials for the treatment of stomach cancer, liver cancer, ovarian cancer and esophageal cancer. The company is also developing T131 for the treatment of type two diabetes.

``Cancer is one of the key areas for Amgen to focus on right now in order to diversify its portfolio,'' said Sena Lund, analyst with Cathay Financial LLC in New York. ``Obviously, Tularik is doing some interesting work that caught Amgen's attention.''

Tularik's collaboration with Amgen isn't expected to produce clinical trials until 2004. Dr. Andrew Perlman, executive vice president of Tularik, said Amgen seemed a natural fit for the company because of its reputation and focus on cancer-related therapies.

Tularik shares jumped $8.39, or 32.3 percent, to close at $2.05 Wednesday on the Nasdaq market. The infusion of cash gleaned from the Amgen deal is certainly welcomed by the company and Wall Street, analysts said.

In Tularik's first quarter 2003, the company reported net losses of $24.2 million, or 44 cents per share, compared with a net loss of $20.6 million, or 41 cents a share, in the same period a year ago.

The company's total research and development expenses for the first quarter increased 12 percent to $28.3 million from $25.2 million a year ago. Total general and administrative expenses during the quarter increased by 11 percent to $3 million from $2.7 million.

Wall Street had high expectations for Tularik when the company went public in late 1999. The stock traded almost as high as $100 in early 2000, falling below $30 in a matter of months. Biotechnology investors thought Tularik could have been the next Genentech, as the company's chairman, Robert Swanson, was a Genentech founder, according to a Red Herring article published in Oct. 1999.

But times have changed.

Stock analyst Lund said biotechnology stocks have been thoroughly filtered. Some continue to dominate, and some have fallen prey to the competition, he said.

Amgen has certainly proved its prowess, retaining its ranking as the world's largest biotechnology company.

The company's ability to adapt has been integral to its strength, analysts have said.

Continuing that tradition, several hours after Amgen announced its alliance with Tularik the company named Dr. David Parkinson as the vice president and head of its oncology clinical development. Parkinson was formerly with Novartis.

Amgen shares declined 33 cents to close at $60.70 Wednesday on the Nasdaq market.

Evan Pondel, [phone]

evan.pondel(at)dailynews.com