Connetics Enters Partnership With Medeva PLC for the Development and Commercialization of ConXn -- Relaxin -- in Europe.

PALO ALTO, Calif.--(BW HealthWire)--Jan. 12, 1999--Connetics Corp. (Nasdaq:CNCT) and Medeva PLC announced today that they have entered into a development, commercialization and supply agreement for ConXn(R) (recombinant human relaxin).

Under the terms of the agreement, Medeva will pay license fees, development support and milestone payments. Medeva will be responsible for all development and commercialization activities in Europe and will pay royalties on sales in Europe.

Medeva will pay $8 million upon closing, including a $4 million development fee and a $4 million equity investment, $17 million of milestone payments based upon development progress in the U.S. and Europe and $5 million for the development and approval of each indication in Europe in addition to scleroderma.

In addition, Medeva will pay an estimated $10 million of the product development costs in the U.S. and share U.S. co-promotion rights with Connetics for up to five years. Medeva will purchase relaxin materials from Connetics.

"We are delighted to have Medeva as our European development and marketing partner for ConXn," said Thomas G. Wiggans, president and chief executive officer for Connetics. "This deal achieves our major goals for the relaxin program. First, we have a quality partner with experience in European and U.S. product development and marketing.

"Second, the economics of this deal provide Connetics with the funds to complete U.S. development of relaxin for scleroderma, as well as complete manufacturing scale-up and conduct studies for additional indications for relaxin. Finally, it provides Connetics the benefit of Medeva's sales and marketing organization for the U.S. launch of relaxin for scleroderma, while allowing Connetics to retain all commercial rights in the U.S.

"This represents Connetics' second major ConXn collaboration within a year. In conjunction with our Suntory partnership for Japan, we have the partners and the resources to develop relaxin for scleroderma, and study it for additional fibrotic diseases, on a global scale."

Commenting on today's announcement, Medeva's Chief Executive, Dr. Bill Bogie, said "Scleroderma is a distressing disease for which there is no cure at present. ConXn offers the potential to achieve a significant improvement in the condition for sufferers. We have been impressed by Connetics' early research and development work on this project and we are pleased to be their partner in working to bring this much needed therapy speedily to the market."

Medeva PLC, based in the United Kingdom, is an international company developing, manufacturing, and marketing prescription pharmaceutical products in the following main therapeutic areas: respiratory care, vaccines, CNS therapies (attention deficit disorder and anti-obesity), gastroenterology, hospital products and dermatology.

In the U.K., Medeva is the sole producer of human vaccines, including influenza, childhood and traveler's vaccines. In the U.S., Medeva's leading products include methylphenidate and prescription cough and cold products.

Scleroderma is a life threatening connective tissue disease resulting from an excessive production of collagen. The disease afflicts approximately 300,000 patients in the U.S. alone, 80 percent of whom are women. In its severe form (which affects approximately 70,000 patients), the disease results in hardening of the skin and internal organs, and is fatal in 50 to 70 percent of cases within five years.

It is estimated that the total economic impact of treating scleroderma in the United States exceeds $1.5 billion annually, according to a paper published in Seminars in Arthritis and Rheumatism.

Human recombinant relaxin, first elucidated by the Howard Florey Institute of the University of Melbourne in Australia, is a natural protein that has been demonstrated to inhibit excessive connective tissue build-up by decreasing collagen production and enhancing collagen breakdown.

Results of a double-blind Phase II trial of ConXn for scleroderma showed a statistically significant improvement in the primary endpoint over placebo with the group of patients receiving a dose of 25 micrograms/kg/day, and positive trends were observed in 11 secondary parameters, including physical parameters, such as lung function, oral aperture and hand extension, and quality of life parameters, such as eating, gripping, reaching and personal hygiene.

Overall, the drug was well tolerated. The outcome of the trial represents the first controlled clinical study to show positive results in the treatment of scleroderma. Connetics expects to begin a pivotal trial of ConXn in scleroderma in the first quarter of 1999 and is also conducting preclinical studies to evaluate the potential use of ConXn for the treatment of organ fibrosis and infertility.

Connetics Corp., headquartered in Palo Alto, is focused on the acquisition, development and commercialization of marketed and late-stage products.

Connetics currently markets Ridaura(R) (auranofin), a treatment for rheumatoid arthritis.

In addition to ConXn, several products are under development including Luxiq(TM) and OLUX(TM), for the treatment of certain dermatological indications; and gamma interferon (through its wholly-owned subsidiary, InterMune Pharmaceuticals Inc.) for the treatment of certain congenital, infectious and other diseases.

For more information on Connetics, you may visit the Connetics Web Site at http://www.connetics.com

This news release contains forward-looking statements that involve risks and uncertainties that could cause actual results or events to differ materially from those expressed in such forward-looking statements. Potential risks and uncertainties include, without limitation, those associated with product development, clinical trials, future revenues and profitability, and obtaining marketing approval. These and other factors are discussed in more depth in Connetics' Form 10-K for the fiscal year ended Dec. 31, 1997 under the heading "Additional Factors That May Affect Future Results" and the company's other filings with the SEC. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in the projections or forward-looking statements.