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      schrieb am 30.03.00 18:14:16
      Beitrag Nr. 1 ()
      UNITED STATES
      SECURITIES AND EXCHANGE COMMISSION
      WASHINGTON, D.C. 20549

      FORM 10-K

      /X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
      --- Act of 1934.

      For the fiscal year ended DECEMBER 31, 1999 or

      / / Transition report pursuant to Section 13 or 15(d) of the Securities
      --- Exchange Act of 1934.

      For the transition period from __________ to __________.

      Commission file number: 0-18006

      THE IMMUNE RESPONSE CORPORATION
      (Exact name of registrant as specified in its charter)

      DELAWARE 33-0255679
      (State or other jurisdiction of (IRS Employer Identification No.)
      incorporation or organization)





      5935 DARWIN COURT, CARLSBAD, CA 92008
      Address of principal executive offices

      (760) 431-7080
      Registrant`s telephone number including area code

      Securities registered pursuant to Section 12(b) of the Act: None

      Securities registered pursuant to Section 12(g)
      of the Act: Common Stock, Par Value $.0025
      Preferred Stock Purchase Rights
      (Title of Class)



      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
      Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
      file such reports), and (2) has been subject to such filing requirements for the past 90 days.

      Yes X No


      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
      not be contained, to the best of registrant`s knowledge, in definitive proxy or information statements incorporated by reference
      in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

      The aggregate market value of the Common Stock held by non-affiliates of the registrant, based upon the last sale price of the
      Common Stock reported on the National Association of Securities Dealers Automated Quotation National Market System on
      March 10, 2000 was $341,346,000.

      The number of shares of Common Stock outstanding as of March 10, 2000 was 27,209,345.


      DOCUMENTS INCORPORATED BY REFERENCE

      (To the Extent Indicated Herein)

      Registrant`s Proxy Statement to be filed with the Securities and Exchange Commission in connection with the solicitation of
      proxies for the Registrant`s 2000 Annual Meeting of Stockholders to be held on May 25, 2000 is incorporated by reference in
      Part III, Items 10 (as to directors), 11, 12 and 13 of this Form 10-K.

      2

      ITEM 1. BUSINESS

      GENERAL
      The Immune Response Corporation ("Immune Response" or the "Company") is a biopharmaceutical company developing
      immune-based therapies to induce specific immune responses for the treatment of HIV, autoimmune diseases and cancer. In
      addition, the Company is developing a targeted non-viral delivery technology for gene therapy, which is designed to enable the
      delivery of genes directly to the liver via intravenous injection. The Company`s gene therapy program is focused on diseases of
      the liver.


      PRODUCTS UNDER DEVELOPMENT(1)

      PRECLINICAL PHASE 1 PHASE 2 PHASE 3
      ----------- ------- ------- -------
      IMMUNE-BASED THERAPIES

      HIV [GRAPH] -----------------------------------------------------------


      Rheumatoid Arthritis [GRAPH] ---------------------------------------------
      Psoriasis [GRAPH] -------------------------------------
      Multiple Sclerosis [GRAPH] ----------------------------


      Colon Cancer [GRAPH] ----------------------------
      Brain Cancer [GRAPH] ---------------
      Melanoma Cancer [GRAPH]
      Prostate Cancer [GRAPH]



      GENE THERAPY
      Hemophilia A [GRAPH]
      Hepatitis [GRAPH]





      (1) The table describes the status of the current product candidates and is not intended to depict the relative lengths of time of
      any of the stages of drug discovery and preclinical and clinical development. The amount of time spent in any phase of
      development will vary substantially from product to product and there can be no assurance that any of the products will
      proceed beyond the phase depicted or will receive regulatory approval. See "Government Regulation."

      THE IMMUNE SYSTEM
      The immune system is the body`s natural defense mechanism to prevent and combat disease. When a competent immune
      system recognizes a foreign material or biological invader it normally induces a response. There are two major arms of the
      immune system: T cell-based and B cell or antibody-based.

      T cells are specialized white blood cells that are normally produced by the body to kill infected cells. A T cell-based immune
      response begins when these specialized T cells, immune cells, recognize foreign "invaders" such as viruses or bacteria within
      the body. However, significant evidence suggests that infections trigger a T cell-based immune response during the initial
      course of their progression but this response is not always sufficient to eradicate the disease. In fact, some diseases are able to
      produce substances that suppress the immune response, thus making it important to provide assistance to the immune system.

      The Company believes that its technology will regulate the body`s immune system to recognize and combat diseases such as
      HIV, autoimmune disease and cancer. Ways that this can be accomplished are by boosting the killer T cell responses against
      HIV and cancer and boosting the regulatory T cell response against the disease inducing T cells in autoimmune diseases such
      as rheumatoid arthritis, psoriasis and multiple sclerosis.

      OUR IMMUNE BASED THERAPIES

      IMMUNE BASED THERAPIES FOR HIV
      BACKGROUND. AIDS, which is caused by a virus known as HIV, is a condition that slowly destroys the body`s immune
      system making the body vulnerable to opportunistic infections. The spread of HIV is a result of the virus invading the host cell
      where it uses the host cell`s protein synthesis capability to replicate. The immune system responds by

      3

      producing antibody and cellular immune responses capable of attacking HIV. While these and other responses are usually
      sufficient to temporarily arrest progress of the infection and reduce levels of virus in the blood, the virus continues to replicate
      and slowly destroys the immune system by infecting and killing critical T cells, known as CD4 cells. The CD4 cells are needed
      to maintain the immune system. As the infection progresses, the immune system`s control of HIV levels weakens, the level of
      virus in the blood rises and the level of critical T cells declines to a fraction of normal level. Currently available antiviral
      products have been shown to be effective at reducing the levels of virus in the blood, however, certain limitations in the therapy
      have prevented the antiviral products from being as effective as originally predicted. This is due primarily to viral resistance and
      the inability to stimulate the infected individual`s own immune system to kill the virus.

      The World Health Organization ("WHO") estimates there are approximately 33 million individuals around the world infected
      with HIV. WHO also stated that during 1998, 5.8 million individuals (including 590,000 children) became infected with HIV.
      This represents approximately 16,000 new infections per day. In the United States, the number of HIV-infected individuals is
      estimated at 1 million. The HIV epidemic represents a significant societal threat to both developed and developing nations since
      most of the HIV-infected individuals are expected to ultimately develop AIDS, creating a significant burden on healthcare
      systems and economies around the world.

      REMUNE. REMUNE is designed to stimulate an HIV-infected individual`s immune system to attack HIV. The Company
      believes results from its previous clinical trials demonstrated that REMUNE significantly boosts HIV-specific immune
      responses in HIV-infected individuals. Furthermore, the Company believes REMUNE stimulates the production of specific
      antiviral substances, such as chemokines, which naturally protect T cells from HIV infection. By utilizing an immune-based
      therapy such as REMUNE, the Company believes it may be possible to boost the HIV infected individual`s immune system
      against the virus and further optimize the effects of antiviral drug therapy.

      HIV opinion leaders have begun to recognize that in order to effectively stop or slow the progression of HIV to AIDS,
      therapies must stimulate HIV cell mediated immune response in infected individuals (HIV-specific T cell proliferation) in
      addition to reducing viral load through the use of antiviral drugs. Furthermore, and most importantly, antiviral drugs do not
      enhance HIV specific immune function which is now thought by numerous researchers to be important in controlling HIV
      replication. The use of REMUNE to reconstitute HIV specific immunity may provide a unique niche for REMUNE to be
      utilized in combination with drug therapy to provide long-term management of HIV.

      CLINICAL TRIALS. In 1999, the Company discontinued a 2,526 patient Phase 3 clinical endpoint trial. The trial was
      discontinued because differences in clinical endpoints were not observed between treatment groups and extending the trial
      would have been unlikely to provide sufficient additional clinical endpoints to permit statistically significant differences between
      the treatment groups to be observed in the near term. The primary efficacy endpoint for the trial was disease progression to an
      AIDS defining condition, or death. At the time the study began this was the only accepted endpoint for approval by the FDA
      for vaccines. However, since the discontinuation of the 2,526 patient Phase 3 trial, the FDA has agreed to accept virologic
      endpoint trials for the basis of approval for REMUNE. This allows the Company to use virologic failure as the primary
      endpoint, which was accepted, for most of the antiretroviral products that have been approved under the drug division of the
      FDA. Under the revised requirements, Agouron Pharmaceuticals, Inc. ("Agouron"), a wholly owned subsidiary of
      Warner-Lambert Company, and Immune Response have initiated a Phase 3 pivotal trial in 550 patients to evaluate whether
      REMUNE plus highly active antiviral therapy (HAART) delays the time to virologic failure. This trial will assess whether
      REMUNE plus HAART is capable of delaying the time that the HIV virus increases in a patient`s blood. If the trial is
      successfully enrolled and completed, results can be expected by the second half of 2001.

      The Thailand clinical trial in 297 infected Thai patients, conducted by Trinity Medical, was completed in 1999. The primary
      endpoint was increase in CD4 cells. The primary endpoint was met in this 40-week clinical trial. Although patients received no
      antiviral drug therapy, REMUNE augmented CD4 cells and enhanced HIV specific immunity. Further follow-up has shown
      stable or decreased viral load in a majority of the patients that have been examined.

      A REMUNE study is also being conducted in Spain. The ongoing 243 patient trial combines REMUNE with antiviral drug
      therapy and is assessing the effect of REMUNE on virologic failure. The data safety monitoring board for this trial, which was
      designed to evaluate immunologic and virologic endpoints, met in the fourth quarter of 1999 and concluded that the trial could
      continue to completion which is scheduled for April 2001.

      The results of a Phase 1, 10 patient pediatric trial conducted by the National Institutes of Health were published in the Journal
      of Infectious Disease showing that REMUNE was well tolerated in children on antiviral drug therapy

      4

      and induced HIV specific immune responses. Furthermore, the results showed that children receiving the adult dose of
      REMUNE had a significant sustained decrease in viral load compared to children who received a lower dose.

      Previous Phase 1 and 2 studies in approximately 350 subjects indicated that REMUNE was well tolerated with the most
      common side effect being injection site reactions. These trials indicated that REMUNE is safe, that it may induce HIV-
      specific immune responses and showed positive trends on the virologic and immunologic markers.

      TECHNOLOGY. Remune is composed of inactivated HIV, depleted of its envelope, and emulsified in Incomplete Freund`s
      Adjuvant ("IFA"), an agent which elicits a more potent immune response by more effectively presenting the inactivated virus to
      the immune system. Remune is manufactured by first culturing HIV-infected human T cells. The virus is then purified from this
      cell culture and inactivated with betapropiolactone, a chemical agent commonly used for viral inactivation, and then physically
      inactivated with irradiation. Each of these procedures alone is capable of inactivating HIV. During processing and purification,
      the outer envelope protein of the virus, known as gp120, is depleted from the inactivated HIV. The final envelope-depleted HIV
      is emulsified in IFA and is filled in syringes. When introduced into HIV-infected individuals, Remune appears to stimulate an
      HIV-specific immune system response, which the Company believes may provide a safe, effective and long-lasting benefit to
      these individuals.

      REMUNE is based on the core proteins of the virus, which are consistent across multiple strains of HIV. Earlier approaches to
      HIV immune-based therapies were based on the viral envelope, proteins located on the outside of the virus, and may not have
      been effective due to mutations in the viral envelope. The Company believes REMUNE has shown to be well tolerated after
      repeated use in over 2,000 individuals. The Company believes REMUNE may be an appropriate treatment for HIV-infected
      individuals to take alone or in combination with other treatments. REMUNE is administered by intramuscular injection, by a
      healthcare professional, once every three months.

      Currently, the HIV-1 virus continues to evolve and mutate and as a result different strains or clades of HIV-1 have emerged
      worldwide. This creates a moving target for single protein immunogens that are being developed that are clade specific. The
      Company believes that, because REMUNE is a whole virus and contains the core proteins that are more genetically conserved,
      individuals treated with REMUNE may be able to elicit broad immune responses to multiple subtypes of HIV-1 found
      throughout the world. This type of broad cross reactivity may have future implications for both therapeutic and preventive
      vaccines.

      EXISTING THERAPIES FOR HIV. Currently available antiviral products have been shown to be effective at reducing the
      levels of virus in the blood, however, certain limitations in the therapy have prevented the antiviral products from being as
      effective as originally predicted. The antiviral products may be associated with significant toxicity and eventual induction of
      viral resistance. In addition, non-compliance with the strict dosage regimen may also reduce the effectiveness and can
      accelerate emergence of resistance.

      REMUNE BENEFITS. It is currently estimated that only 30% to 40% of HIV-infected individuals in the United States use
      cocktail therapies (various combinations of reverse transcriptase and protease inhibitors). Of these individuals, up to 50%
      discontinue treatment due to resistance, toxicity, lack of compliance or because the cocktail therapy was not effective in
      reducing the viral load. REMUNE, unlike drugs, can induce an HIV specific response, is well tolerated and is easy to
      administer. REMUNE has been administered to over 2,000 patients and has an excellent safety profile.

      Most importantly, antiviral drugs do not enhance HIV-specific immune function, which is now thought by numerous researchers
      to be important in controlling HIV replication. The fact that REMUNE reconstitutes HIV-specific immunity provides a unique
      niche for REMUNE to be utilized in combination with drug therapy to provide long-term management of disease.

      One goal of the combination REMUNE-drug approach is to prolong the impact of antiviral drug therapies on viral load by
      increasing the immune response to HIV-infected cells. If successful, a delay in drug resistance and a prolonged duration of low
      levels of virus in the blood coupled with an increase in the immune response to HIV could translate into clinical benefit.

      MANUFACTURING. The Company subleases a 52,500 square foot facility in King of Prussia, Pennsylvania dedicated to the
      manufacture of REMUNE for clinical trials and, if the FDA approves the product, initial commercial production. In February
      1996, the Company received clearance from the FDA to release the product for use in clinical trials. The Company believes the
      facility, which is a full-scale, GMP commercial process facility, is capable of supplying

      5

      clinical trial quantities and initial commercial quantities. The Company relies on a third party for the final inactivation step of the
      manufacturing process. If the existing manufacturing operations prove inadequate, there can be no assurance that any
      arrangement with a third party can be established on a timely basis, or that the Company can establish other manufacturing
      capacity on a timely basis. The Company believes that the raw materials necessary to produce REMUNE are readily available
      from various sources.

      COMMERCIALIZATION STRATEGY. During June 1998, the Company and Agouron entered into an agreement under
      which the Company exclusively licensed to Agouron the marketing rights to REMUNE in North America, Europe, Japan and
      certain other countries, if regulatory approvals are received. The Company and Agouron have conducted physician and patient
      focus group sessions to begin preparations for a commercial marketing launch of REMUNE, subject to the successful
      conclusion of the clinical trials and final approval of the product by the FDA. If REMUNE is successfully developed and
      approved for marketing, third party reimbursement will need to be sought for the costs of related treatments from government
      health administration authorities, private health coverage insurers, managed care organizations and other organizations. The two
      companies will share all profits from the commercialization of REMUNE on a 50/50 basis, if REMUNE is successfully
      developed and receives the necessary regulatory approvals. The Company also has partners for Thailand and South and
      Central America.

      IMMUNE-BASED THERAPIES FOR AUTOIMMUNE DISEASES
      BACKGROUND. Autoimmune disease results from the body`s immune system manufacturing T cells and or antibodies that
      are directed against the body`s own cells or organs as if they were foreign. Several autoimmune disorders, including rheumatoid
      arthritis, psoriasis and multiple sclerosis, result from the proliferation of misdirected T cells that incorrectly identify and destroy
      the individual`s own tissue.

      TECHNOLOGY. The Company`s proprietary autoimmune immune-based therapies under development are designed to inhibit
      or downregulate the T cells that the Company believes cause the tissue damage in certain autoimmune diseases. These
      therapies are designed to induce specific immune responses by inhibiting the disease-causing T cells. The Company`s
      immune-based approach for the treatment of these autoimmune diseases is based on the immune system`s ability to down
      regulate disease causing T cells. The Company is pursuing this approach for the treatment of rheumatoid arthritis, psoriasis and
      multiple sclerosis. The Company`s products under development are T cell receptor peptide vaccines based on a combination of
      synthetic peptides from T cell receptors emulsified in IFA.

      BENEFITS OF OUR APPROACH. The Company believes that its approach to the treatment of autoimmune diseases may
      provide several advantages over existing therapies and competing approaches based on immune system regulation. In clinical
      studies, the Company`s immune-based therapies using T cell receptor peptides have demonstrated a lack of toxicity and a
      specific impact on the disease-causing cells. These results, combined with the ease of administration through infrequent
      intramuscular injections (one to three month intervals) and the potential for a long-lasting immunity, may provide an important
      addition or alternative to existing therapies, which treat only the symptoms of the disease.

      While autoimmune diseases may involve any organ system, common targets include the lining of the joints in rheumatoid
      arthritis, the skin in psoriasis and the white matter of the brain and spinal cord in multiple sclerosis. Current treatments for these
      diseases address only the symptoms and are ineffective in halting the progressive tissue destruction caused by the autoreactive
      T cells. This progression often results in severe debilitation or death.

      RHEUMATOID ARTHRITIS
      BACKGROUND. Rheumatoid arthritis is a chronic inflammatory disease characterized by persistent inflammation of the lining
      of the joints accompanied by stiffness and pain or tenderness on motion. It is estimated that approximately 2.1 million individuals
      in the United States, and 1-2% of the worldwide population, suffer from rheumatoid arthritis, and up to $5.6 billion is spent
      annually worldwide on medications designed to treat only the symptoms of this debilitating disease.

      EXISTING THERAPIES. There is currently no cure for rheumatoid arthritis. Currently, management of rheumatoid arthritis
      requires early diagnosis and aggressive treatment before functional impairment and irreversible joint damage has occurred.
      Available therapies generally have adverse side effects and address only the symptoms of the disease. By contrast, the
      Company`s rheumatoid arthritis therapy is intended to target and inhibit the specific T cells thought to be involved in initiating the
      disease process. The Company believes this inhibition may reduce the inflammatory events that occur as the disease
      progresses.

      6

      PRODUCT UNDER DEVELOPMENT. The treatment being developed is designed to stimulate the immune system of a
      rheumatoid arthritis patient to control the T cells that are initiating the disease. The Company believes that eliminating or
      inhibiting these T cells may prevent further damage to the tissue of joints.

      HUMAN CLINICAL TRIALS. Based on results observed in an earlier Phase 2 clinical trial, a Phase 2b clinical trial was
      conducted. The Phase 2b clinical trial, intended to confirm and expand upon the clinical results from an earlier completed Phase
      2 clinical trial, included 340 individuals with rheumatoid arthritis who received treatment over 24-weeks at 26 clinical sites. The
      Company believes that the results from this Phase 2b trial suggest a favorable treatment effect according to the American
      College of Rheumatology (ACR) 20 improvement criteria with significance at one time point after the third injection. These
      findings were consistent with and expanded upon the results shown in the previous Phase 2 trial. The ACR 20 criteria require
      an improvement in tender and swollen joint counts of at least 20% from baseline, along with improvement in three of five other
      disease-related criteria. The results from this study also confirmed that the treatments were safe and well tolerated. The results
      of the Phase 2b clinical trial were presented at the American College of Rheumatology 1999 Annual Meeting.

      PSORIASIS
      BACKGROUND. Psoriasis is a chronic and recurrent proliferative disease of the skin characterized by irritating and
      sometimes painful, defined red patches covered with silvery-white scales. According to the National Psoriasis Foundation,
      psoriasis affects over 6 million Americans. Annual outpatient costs for treatment are currently estimated at up to $3 billion per
      year. A distinguishing feature of the disease is the rapid sloughing of skin layers. While normal skin cells mature in 28 to 30
      days, skin cells of psoriasis patients move to the surface of the skin in approximately three to seven days.

      EXISTING THERAPIES. Current treatments, which range from topical ointments to phototherapy, address the symptoms of
      psoriasis rather than the cause of the disease. Not all treatments work for every individual. These treatments often require
      individuals to experiment and/or combine therapies in order to discover the regimen that is most effective. Treatment success
      requires faithful compliance to the regimen and provides varying degrees of relief from the disease. Patients usually have to
      cycle in and out of these therapies to achieve any therapeutic benefit. By contrast, the Company`s psoriasis therapy is intended
      to target and inhibit the immune system cells that may be involved in the initiation of the disease process.

      PRODUCT UNDER DEVELOPMENT. The treatment being developed by the Company is designed to stimulate the immune
      system of a psoriasis patient to regulate the disease causing T cells. The Company believes that eliminating or inhibiting these T
      cells may alleviate the effects of this disease.

      HUMAN CLINICAL TRIALS. Based on results observed in an earlier Phase 2 clinical trial, a second Phase 2 clinical trial
      was conducted. This Phase 2 clinical trial involved 84 individuals with moderate to severe psoriasis and was designed to
      evaluate the safety and optimal dose of the therapy. The Company believes the results from this trial suggest that the groups
      that received intramuscular injections of T cell receptor peptides along with IFA showed clinical improvement according to the
      psoriasis and severity index (PASI) scores when compared to all other treatment groups.

      MULTIPLE SCLEROSIS
      BACKGROUND. Multiple sclerosis is a chronic disease of the central nervous system that effects the white matter of the
      brain and spinal cord. It is one of the most common causes of chronic neurologic disability in young adults. Multiple sclerosis
      afflicts approximately 350,000 individuals in the United States and more than 1 million individuals worldwide.

      EXISTING THERAPIES. The mechanism of action for currently approved therapies is not clearly understood. These
      therapies provide modest benefit for the disease and have many side effects.

      PRODUCT UNDER DEVELOPMENT. The Company`s proprietary immune-based therapy under development for multiple
      sclerosis contains T cell receptor peptides specific for multiple sclerosis which were found in the cerebrospinal fluid of
      individuals afflicted with multiple sclerosis or because of the reactivity to myelin basic protein.

      HUMAN CLINICAL TRIALS. Based on results from an earlier Phase 1 clinical trial, a second Phase 1 open label trial was
      conducted in patients whose T cells were found to be present at significant levels in spinal fluid cultures of T cells. Ten patients
      received injections of the Company`s therapeutic peptide vaccine over 48 weeks. The results suggest that the TCR therapeutic
      peptide vaccine was again safe and well tolerated, and it generated strong immune

      7

      responses in 8 out of 10 (80%) patients immunized. The patients remained clinically stable as measured by expanded disability
      status scores (EDSS) during the 48-week study.

      IMMUNE-BASED THERAPIES FOR CANCER
      BACKGROUND. Cancer is characterized by the uncontrolled growth of abnormal cells that can spread from the anatomic site
      of origin. This growth is due to alterations or mutations in a cell`s DNA that leads to production of tumor associated antigens
      that are not adequately recognized by the immune system. Cancer vaccines are intended to optimize the patient`s immune
      system`s ability to recognize the antigens so that the immune system intensifies the attack on the cancer. Many cancers can be
      cured if they are detected early and treated promptly; others can be controlled for many years with a variety of treatment
      approaches.

      EXISTING THERAPIES. There are currently several ways to treat cancer, all of which have significant and often severe side
      effects. Surgery, radiation, chemotherapy, hormones and more recently, immunotherapy are most often used to treat cancer.
      Unfortunately, certain tumors are drug resistant from the beginning while others develop resistance with repeated treatments.
      The problem of drug resistance is particularly serious in chemotherapy where tumors develop resistance to multiple drugs after
      only one drug has been administered.
      Avatar
      schrieb am 30.03.00 18:16:54
      Beitrag Nr. 2 ()
      ECHNOLOGY. Immune Response is focused on developing vaccines that will present tumor cells more effectively to the
      immune system. The Company`s technology combines two different kinds of cell lines to make up the vaccine. One is a source
      of tumor antigens (tumor cell lines) and the other is a source of cytokine (genetically engineered skin or fibroblast cell line). The
      tumor cell lines are grown in the lab and not derived from individual patients - avoiding the need for patient-specific vaccines.
      The cytokine-producing fibroblast cell line allows production of a precise and consistent amount of cytokine - a molecule that
      can intensify the immune response. The combination of these two cell types in the vaccine appears to be essential for inducing
      the immunity needed to enable the immune system to attack and eradicate the cancer. The Company`s technology allows for a
      controlled reproducible vaccine that is not patient specific.

      To further enhance the immune system to destroy the cancer, the Company is also developing complementary technology to
      provide cytokines, specifically GM-CSF, by constructing tumor cell lines that express the cytokine on the surface. The
      Company`s goal is to combine these two platform technologies to develop cancer vaccines to treat colon, brain, melanoma, and
      prostate cancers.

      COLON CANCER
      BACKGROUND. Colon cancer is the second most frequently diagnosed cancer in the U.S. with nearly 100,000 new cases
      and 47,000 deaths expected yearly. Well over half of the patients are identified early enough for surgical intervention with the
      intent to cure. However, recurrence of the cancer following surgery is a major problem for about 40% of these patients. In
      addition, more effective treatments are needed for patients with advanced disease at time of presentation.

      HUMAN CLINICAL TRIALS. Based on promising initial clinical findings from an earlier Phase 1 study, a second Phase I
      trial was designed to test a tumor cell line vaccine in patients with late-stage metastatic colon cancer. Three established colon
      tumor cell lines were combined with a fibroblast cell line genetically engineered to express the IL-2 cytokine. Patients received
      three administrations intradermally (under the skin) over a twelve-week period. The study is designed to measure levels of
      Cytotoxic T Lymphocytes (CTL`s) which specifically recognize and kill both the vaccinating tumor cells and/or the patient`s
      own tumor cells. This twelve patient trial will be completed during 2000.

      BRAIN CANCER
      BACKGROUND. Each year, about 18,000 cases of high-grade gliomas are diagnosed in the United States, with the numbers
      increasing yearly in both adults and children. Prognosis for these patients is very poor. Surgical resections followed by either
      radiation or chemotherapy have done little to alter the fatality of this cancer. The mean life expectancy of patients with
      glioblastoma multiforme is only one year after its initial diagnosis and only several months following recurrence. The Company
      believes that novel immune-based treatments could fill a need in treating these cancers.

      HUMAN CLINICAL TRIALS. The Company is conducting a Phase 1 trial of a potential new tumor vaccine designed to
      induce the patient`s immune system to recognize and destroy tumor cells, thereby preventing or delaying the recurrence of
      malignant brain tumors (glioblastoma multiforme and anaplastic astrocytoma). The study will enroll

      8

      12 patients who have just completed surgical resection and radiation treatment, currently the standard of care for newly
      diagnosed glioma patients. The trial will investigate the Company`s platform vaccine technology that utilizes a fibroblast cell line
      genetically modified to secrete the GM-CSF cytokine mixed with irradiated brain tumor (glioma) cell lines. The three goals of
      the study are to evaluate the safety of multiple injections of this cell-line based vaccine, monitor the level of cellular and
      humoral (antibody) immune responses induced by the vaccine against the tumor and examine the effects of immunizations on
      clinical progression of the disease.

      MELANOMA (SKIN) CANCER
      BACKGROUND. According to the American Cancer Society, approximately 44,000 individuals in the United States were
      diagnosed with melanoma in 1999 and an estimated 7,300 deaths resulted from this disease. The major cause of melanoma is
      excessive exposure to the sun`s ultraviolet rays. Despite good therapeutic effects by surgical intervention when detected early,
      there is no effective treatment for metastatic melanoma, and its 5 year survival rate is only 5%. Characterization of many
      established melanoma cell lines has been completed, and those lines intended for clinical testing have been selected.

      PROSTATE CANCER
      Prostate cancer will be newly diagnosed in 334,500 Americans this year, making it the most common cancer among men.
      Prostate cancer is the second leading cause of cancer deaths and the sixth leading cause of death overall among American
      men. This program is in the preclinical stages of development within the company.

      GENE THERAPY
      TECHNOLOGY. The Company is developing a targeted non-viral delivery technology for gene therapy. The Company
      maintains a strong proprietary position in non-viral technology for IN VIVO delivery of therapeutic genes to appropriate cells.
      Once inside the cell, the delivered plasmid DNA, or gene, is capable of performing its normal function, which is to encode for
      the production of a specific protein needed to alleviate a disease condition. Virtually any recombinant protein therapy currently
      being used could be transformed into a gene therapy. The Company believes non-viral delivery may have several advantages
      over current therapies including safety over viral delivery systems, versatility to treat different diseases with the same
      technology, dosing schedule, manufacturability, and cost. Most other competitive gene therapy delivery systems use disabled
      viruses to carry the gene to the cell nucleus, and are inherently immunogenic.

      HEMOPHILIA
      BACKGROUND. Hemophilia A, a hereditary blood clotting disorder, results from the dysfunction or absence of the Factor
      VIII protein. Approximately one of every 5,000 live male births worldwide results in a child afflicted with hemophilia A.
      Current treatments for hemophilia A are expensive.

      In preclinical mouse models, the Company`s GeneDrug technology system has produced therapeutic concentrations of Factor
      VIII by delivering the gene that produces this protein. After delivery to cells that normally produce this protein, the liver cells,
      the Factor VIII protein was expressed and secreted into the bloodstream at therapeutic levels on a continuous basis for several
      weeks. If successfully developed, this product could potentially eliminate the need for daily injections of Factor VIII protein to
      control the regular bleeding episodes associated with hemophilia by allowing the patient to receive periodic injections of the
      Company`s GeneDrug in order to maintain therapeutic levels of Factor VIII. In addition to gene delivery, the Company is
      focused on gene potency. Gene potency is the ability of the gene to generate high levels of its corresponding protein once inside
      the cell. Recently, Company scientists completed the synthesis of a new human Factor VIII gene that has increased potency
      and which contains organ-specific elements that only allow its expression in liver cells.

      HEPATITIS
      BACKGROUND. Hepatitis B is a viral infection of the liver. As many as 1.25 million Americans are chronically infected with
      hepatitis B virus ("HBV") and there are up to 320,000 new cases of HBV infection each year. Hepatitis C virus ("HCV") was
      recently identified as the major cause of non-A/non-B hepatitis. As many as 3.9 million Americans are chronically infected with
      this virus and there are up to 180,000 new cases of HCV infection each year. Recombinant interferon-alpha (IFN-(alpha)) is
      currently approved for treatment of both HBV and HCV. Many patients treated with recombinant IFN-(alpha) do not respond
      and whether there is a long-term benefit among those who have responses is uncertain.

      The Company`s GeneDrug system is designed to be an improvement over current interferon therapy by achieving continuous,
      low-level expression and secretion of the protein specifically in liver cells. In preclinical mouse models,

      9

      the GeneDrug system has successfully achieved expression of interferon protein at therapeutic levels that persist for several
      months. If successfully developed, this could eliminate the need for numerous frequent injections of recombinant interferon
      protein by allowing patients to receive periodic injections of GeneDrug. The Company entered into a research collaboration in
      July 1998 with Schering Corporation to deliver their genes for IFN-(alpha) using the Company`s gene delivery technology for
      the treatment of hepatitis. Schering Corporation`s obligation to fund under the collaboration had expired as of December 31,
      1999.

      NEW GENE DISCOVERY
      BACKGROUND. The Company recently completed a series of biochip studies as part of a gene discovery effort in the gene
      therapy program. Gene expression monitoring using microarrays (biochips) was conducted in several biological models of
      central and peripheral nervous system growth, differentiation and trauma including spinal cord injury. Over 3,000 significant
      gene changes were categorized to a gene expression database being assembled for new drug targets and functional gene
      discovery. Gene expression, especially knowing what genes are upregulated or downregulated, is crucial to the understanding
      of gene function. Since genes are involved in biological processes, knowing gene function could lead to new drug discovery.
      New gene discovery compliments the existing efforts in non-viral gene delivery by potentially supplying genes or gene products
      that may be proprietary to the Company for gene therapy.

      MANUFACTURING
      The Company has established a pilot manufacturing facility at its headquarters in Carlsbad, California for the production of the
      immune-based therapies. This facility is expected to be adequate to supply limited clinical trial quantities for these therapies.
      Additional manufacturing capacity for autoimmune disease and cancer will be needed for commercial scale production, if these
      therapies are approved for commercial sale. For the manufacture of the autoimmune disease therapies under development, the
      Company obtains synthetic peptides from third party manufacturers. The Company believes that the synthetic peptides and
      other materials necessary to produce the autoimmune disease therapies are readily available from various sources, and several
      suppliers are capable of supplying the autoimmune disease peptides in both clinical and commercial quantities.

      PATENTS
      REMUNE - HIV THERAPY. In 1993, the Company received a United States patent relating to REMUNE. In 1998 and 1999,
      additional patents were issued relating to certain products and methods. The Company has also received similar patents in
      Australia, certain European countries, Japan and Russia. The Company has additional patent applications relating to REMUNE
      on file in the United States, as well as in other countries. The patent applications cover, in part, certain products and methods of
      their use for the immunotherapeutic treatment of HIV-infected patients and/or preventive treatment of uninfected individuals.
      There can be no assurance that any additional HIV-related patents will be issued to the Company. Further, there can be no
      assurance that the issued patents, or any patent that may be issued in the future, will survive opposition or provide meaningful
      proprietary protection.

      AUTOIMMUNE DISEASES. During January 1994, the European Patent Office granted the Company a patent covering
      processes for vaccinating against diseases resulting from pathogenic responses by specific T cell populations. In March 1997,
      the Company was issued a patent covering this technology in the United States. In May 1994, the Australian Industrial Property
      Organisation accepted a similar application of the Company. In November 1998 and January 1999, the Company was issued
      two additional United States patents directed to this technology. These patents include composition and method claims for the
      prevention or treatment of certain autoimmune diseases, such as rheumatoid arthritis and proliferative T cell diseases. In
      December 1999, the Company obtained exclusive rights to the T cell receptor intelllectual property of Connetics Corporation
      and XOMA, (US) LLC, creating a broader platform for the potential development of products to treat chronic connective tissue
      and autoimmune diseases such as rheumatoid arthritis, psoriasis and multiple sclerosis. The Company also has patents and
      patent applications relating to its autoimmune technology on file in the United States and other countries, including members of
      the European Patent Convention and Japan. These patent applications cover certain compositions and methods relating to the
      use of T cell receptor peptide sequences to vaccinate against autoreactive T cells involved in autoimmune disease. There can
      be no assurance that any further autoimmune disease patents will be issued to the Company or that any issued patents, or any
      patent that may be issued in the future, will survive opposition or provide meaningful proprietary protection. We are aware that
      AstraZeneca PLC has acquired the rights to a patent, which has been issued in Europe and other countries, that may interfere
      with our ability to develop some of our technologies related to autoimmune disease if the patent is upheld after current
      opposition proceedings. The Company is in discussions with AstraZeneca PLC to resolve any conflict between the Company`s
      and AstraZeneca`s patent. However, there can be no assurance that a cross license or other resolutions satisfactory to the
      Company will result.
      Avatar
      schrieb am 30.03.00 18:19:30
      Beitrag Nr. 3 ()
      A failure to resolve this dispute in a manner favorable to the Company could have a material adverse effect on the Company.
      In March 1998, the Company successfully defended its European patent with respect to its immune-based therapies for
      autoimmune disease technology that was under opposition; although this decision can be appealed, the patent is presently
      enforceable.

      CANCER PROGRAM. Technologies for genetically modifying fibroblasts with cytokine genes or for modifying tumor cells
      with genes to inhibit TGF-(beta) production has been exclusively licensed to the Company from Sidney Kimmel Cancer Center
      (SKCC). SKCC has issued patents and has applied for patent protection in the United States and Europe related to the
      technologies licensed exclusively to the Company. There can be no assurance that the issued patents, or any patent that may be
      issued in the future, will survive opposition or provide meaningful proprietary protection. In April 1999 the Company received a
      patent for Membrane-Bound Cytokine Compositions Comprising GM-CSF (granulocyte-macrophage colony stimulating factor)
      and Methods of Modulating an Immune Response Using Same. The Company has licensed exclusive rights to the technologies
      for inhibiting TGF-(beta) via expressed antisense for lung cancer and licensed exclusive rights to the IL3 radiosensitization in
      several cancers, including prostate cancer but excluding colon cancer. There can be no assurance that the issued patents, or
      any patent that may be issued in the future, will survive opposition or provide meaningful proprietary protection.

      GENE THERAPY. In November 1992, the Company obtained an exclusive license to a United States patent, received by the
      University of Connecticut, covering the Company`s core gene delivery system technology, including methods and compositions
      for delivering DNA to the liver via receptors on the surface of liver cells. In addition, during 1997 and 1999, two related United
      States patents issued, extending the Company`s gene delivery protection to include the delivery of any polynucleotide to any
      mammalian cell via any internalizing cell surface receptor. Thus, the Company`s patent protection in the United States is no
      longer limited to the delivery of genes to the liver. In 1999 a similar patent issued in Europe. In 1998, a corresponding Japanese
      patent application also issued, covering the delivery of any polynucleotide to mammalian cells via non-protein (e.g., synthetic)
      liver-specific ligands.

      The Company also licenses and owns a number of issued United States and foreign patents covering the delivery of specific
      genes and polynucleotides to cells using their proprietary technology, as well as formulations tailored for such delivery. For
      example, the Company owns a United States patent covering the targeted delivery of antisense polynucleotides to cells to treat
      Hepatitis B infection. The Company also licensed an allowed European patent application covering the targeted delivery to cells
      of genes encoding secretory proteins, including blood coagulation factors, to treat hemophilia. The Company continues to file
      patent applications covering novel genes and other aspects of its proprietary gene delivery technology, which the Company
      develops.

      The Company is presently seeking to obtain licenses for certain genes from several different third parties. There can be no
      assurance that the Company will be able to obtain such licenses on commercially favorable terms, if at all, and if these licenses
      are not obtained, the Company might be prevented from using certain of its technologies. The Company`s failure to obtain a
      license required to continue practicing its own technologies would have a material adverse effect on the Company.

      There can be no assurance that any additional gene therapy patents will be issued to the Company. Further, there can no
      assurance that the issued patents, or any patent that may be issued in the future, will survive opposition or provide meaningful
      proprietary protection.

      COMPETITION
      HIV. The Company is engaged in segments of the biopharmaceutical industry, including the treatment of HIV, that are
      intensely competitive and rapidly changing. If successfully developed and approved the product candidates and compounds that
      the Company is currently developing will compete with numerous existing therapies. For example, there are at least 11 drugs
      currently approved for the treatment of HIV. In addition, a number of companies are pursuing the development of novel
      pharmaceutical products that target the same diseases that the Company is targeting, and some companies, including several
      multinational pharmaceutical companies, are simultaneously marketing several different drugs and may therefore be able to
      market their own combination drug therapies. The Company believes that a significant number of drugs are currently under
      development and will become available in the future for the treatment of HIV.

      Although the Company believes that there is a significant future market for therapeutics to treat HIV and other viral diseases,
      the Company anticipates that even if it successfully develops REMUNE and REMUNE is approved for marketing, it will face
      intense and increasing competition in the future as new products enter the market and advanced technologies become available.
      There can be no assurance that existing products or new products for the

      11

      treatment of HIV developed by the Company`s competitors, including Glaxo Wellcome, plc, Merck & Co. and Abbott
      Laboratories, will not be more effective, or more effectively marketed and sold, than REMUNE, should it be successfully
      developed and receive regulatory approval, or any other therapeutic for HIV that may be developed by the Company.
      Competitive products or the development by others of a cure or new treatment methods may render the Company`s
      technologies and products and compounds obsolete, noncompetitive or uneconomical prior to the Company`s recovery of
      development or commercialization expenses incurred with respect to any such technologies or products or compounds. Many of
      the Company`s competitors have significantly greater financial, technical and human resources than the Company and may be
      better equipped to develop, manufacture, sell, market and distribute products. In addition, many of these companies have
      extensive experience in preclinical testing and clinical trials, obtaining FDA and other regulatory approvals and manufacturing
      and marketing pharmaceutical products. For use individually or in combination therapy, many of these competitors also have
      products that have been approved or are in late-stage development and operate large, well-funded research and development
      programs. Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with
      large pharmaceutical and biotechnology companies. Furthermore, academic institutions, governmental agencies and other public
      and private research organizations are becoming increasingly aware of the commercial value of their inventions and are more
      actively seeking to commercialize the technology they have developed.

      New developments in areas in which the Company is conducting its research and development are expected to continue at a
      rapid pace in both industry and academia. If the Company`s product candidates and compounds are successfully developed and
      approved, the Company will face competition based on the safety and effectiveness of its products and compounds, the timing
      and scope of regulatory approvals, availability of manufacturing, sales, marketing and distribution capabilities, reimbursement
      coverage, price and patent position. There can be no assurance that the Company`s competitors will not develop more effective
      or more affordable technology or products, or achieve earlier patent protection, product development or product
      commercialization than the Company. Accordingly, the Company`s competitors may succeed in commercializing products more
      rapidly or effectively than the Company, which could have a material adverse effect on the Company`s business, financial
      condition and results of operations.

      TREATMENTS FOR AUTOIMMUNE DISEASE. Several emerging technologies related to immune system regulation, if
      successfully developed, could compete with the Company`s autoimmune disease treatments under development. The Company
      believes that its principal competition in the autoimmune disease area will come from companies conducting research in the
      areas of T cell receptors, interaction between T cells and the target antigen and tissue, specific targeting of activated T cell
      populations, and mechanisms of tolerance including oral tolerance approaches. Scientific reports on T cell receptor research
      have also discussed approaches similar to that of the Company.

      TREATMENTS FOR CANCER. New cancer therapies are being developed by a number of individual investigators and
      companies. Some of these approaches involve modification of tumor cells with a variety of cytokines, which approaches may
      prove competitive with the technologies being developed by the Company. Many of the Company`s competitors have
      substantially greater experience, financial and technical resources and production, marketing and development capabilities than
      the Company. There can be no assurance that competitors have not or will not succeed in developing technologies and products
      more quickly or that are more effective than any which have been or are being developed by the Company or which would
      render the Company`s technology and products obsolete and noncompetitive.

      GENE THERAPY. The Company believes that competition in the treatment of the diseases targeted by its gene therapy
      program will be of two types: chronic treatment with pharmaceutical products; and other gene therapy systems under
      development for insertion of the correct gene. There currently exist a number of approved therapies for treatment of
      hemophilia, and hepatitis B and C. Both purified and recombinant forms of Factor VIII have been approved by the FDA for
      treatment of hemophilia and are effective in stopping bleeding episodes. Interferon alpha-2b is currently approved for treatment
      of chronic hepatitis B and C. Other interferons are being tested for the treatment of viral hepatitis. In addition to interferons, a
      variety of nucleoside analogs have been tested for treatment of chronic hepatitis B, including 3TC.

      Several major pharmaceutical companies are investigating gene therapy treatments for the delivery of proteins to treat these
      diseases. If these prove effective, they may compete with the Company`s gene delivery therapies. Many of the Company`s
      competitors have substantially greater experience, financial and technical resources and production, marketing and development
      capabilities than the Company. There can be no assurance that competitors have not or will not succeed in developing
      technologies and products more quickly or that are more effective than

      12

      any which have been or are being developed by the Company or which would render the Company`s technology and products
      obsolete and noncompetitive.

      GOVERNMENT REGULATION
      Clinical testing, manufacture, promotion and sale of the Company`s drug products are subject to extensive regulation by
      numerous governmental authorities in the United States, principally the FDA, and corresponding state and foreign regulatory
      agencies. The Company believes that REMUNE and most of its other potential immune-based therapies will be regulated by
      the FDA as biological drug products under current regulations of the FDA. Biological products must be shown to be safe, pure
      and potent (i.e., effective) and are subject to the same regulatory requirements as nonbiological products under the Food and
      Drug Administration Act ("FDA Act"), as amended by the Food and Drug Administration Modernization Act of 1997 ("FDA
      Modernization Act"), except that a biological product licensed under the PHS Act ("PHS Act") is not required to have an
      approved New Drug Application ("NDA") under the Federal Food, Drug and Cosmetic Act ("FDC Act"). The FDA
      Modernization Act directed the FDA to take measures to minimize the differences in the review and approval of marketing
      applications for biological and nonbiological products. The FDA Modernization Act also made significant revisions to the
      statutory requirements with regard to the approval of new biologics and nonbiological products. Among other things, the FDA
      Modernization Act established a new statutory program for the approval of fast track drugs, streamlined clinical research, and
      revised the content of product approval applications and the FDA review process. The FDA is required to issue regulations and
      guidelines in order to implement certain of these new requirements. Until the FDA implements these regulations and guidelines,
      it is impossible to predict the impact of the FDA Modernization Act on the review and approval of any marketing applications
      that the Company may submit to the FDA in the future. The FDC Act, the PHS Act and other federal and state statutes and
      regulations govern or influence the testing, manufacture, safety, effectiveness, labeling, storage, recordkeeping, approval,
      advertising, distribution and promotion of biological prescription drug products. Noncompliance with applicable requirements can
      result in, among other things, fines, injunctions, seizure of products, total or partial suspension of product marketing, failure of
      the government to grant premarket approval, withdrawal of marketing approvals and criminal prosecution.

      The steps required before a biological drug product may be marketed in the United States generally include preclinical studies
      and the filing of an IND application with the FDA, which must become effective pursuant to FDA regulations before human
      clinical trials may commence. Reports of results of preclinical studies and clinical trials for biological drug products are
      submitted to the FDA in the form of a Biologics License Application (the "BLA") for approval for marketing and commercial
      shipment. Submission of a BLA does not assure FDA approval for marketing. The BLA review process may take a number of
      years to complete, although reviews of applications for treatments of AIDS, cancer and other life-threatening diseases may be
      accelerated or expedited. Failure of the Company to receive FDA marketing approval for REMUNE or any of its other
      products under development on a timely basis could have a material adverse effect on the Company`s business, financial
      condition and results of operations.

      In the past, in addition to obtaining approval for each biological drug product, an Establishment License Application (the "ELA")
      usually was required to be filed and approved by the FDA. However, the FDA Modernization Act repealed the statutory
      requirement for an ELA for a biological product. Now only a single BLA covering both the biological product and the facility in
      which the product is manufactured is required. The FDA also has been directed by the FDA Modernization Act to take
      measures to minimize the differences in the review and approval of biological drugs required to have approved BLAs under the
      PHS Act and nonbiological drugs required to have approved NDAs under the FDC Act.

      Among the other requirements for BLA approval is the requirement that prospective manufacturers conform to the Good
      Manufacturing Practices (the "GMP") regulations specifically for biological drugs, as well as for other drugs. In complying with
      the GMP regulations, manufacturers must continue to expend time, money and effort in production, recordkeeping and quality
      control to assure that the product meets applicable specifications and other requirements. The FDA periodically inspects
      biological drug product manufacturing facilities in order to assure compliance with applicable GMP requirements. Failure to
      comply with the GMP regulations subjects the manufacturer to possible FDA regulatory action, such as the suspension of
      manufacturing, product recall or seizure, injunction and criminal prosecution. There can be no assurance that the Company or
      its contract manufacturers, if any, will be able to maintain compliance with the GMP regulations on a continuing basis. Failure
      to maintain such compliance could have a material adverse effect on the Company`s business, financial condition and results of
      operations.

      13

      The Company believes its proprietary GeneDrug and cancer treatment therapies also will likely be regulated as biological
      products. This is because the Company`s gene products are subject to the FDA`s industry guidance for Human Somatic Cell
      Therapy and Gene Therapy, which was issued by the FDA in March 1998 (the "1998 Guidance"), as well as earlier FDA
      notices on this subject. The 1998 Guidance confirms that gene therapy products will be regulated by the FDA as biological
      products subject to biological product licensure requirements. In addition, the 1998 Guidance describes FDA concerns regarding
      production, quality control testing, and the administration of recombinant vectors for gene therapy. No assurance exists that the
      Company or its suppliers can successfully address all of the concerns of the 1998 Guidance with respect to gene therapy
      products. In addition, since issuance of the 1998 Guidance there have been developments relating to adverse patient reactions
      in gene therapy trials that have led to increased FDA scrutiny of all gene therapy research. No assurance exists that the
      Company can successfully respond to the more rigorous requirements prompted by that scrutiny. As with the Company`s other
      potential products, the gene therapy products will be subject to extensive FDA regulation throughout the product development
      process, and there can be no assurance that any of these products will be successful at securing the requisite FDA marketing
      approval on a timely basis, if at all.

      The preclinical and clinical testing process to obtain FDA approval of a biological drug is expensive and time consuming.
      Preclinical studies are conducted in animals usually to evaluate the potential safety of a product. The results of preclinical
      studies are submitted to the FDA as part of the IND application, which must become effective pursuant to FDA regulations
      before human clinical trials may begin. Human clinical trials typically are conducted in three phases and are subject to detailed
      protocols. Each protocol indicating how the clinical trial will be conducted must usually be submitted for review to the FDA as
      part of the IND application. The FDA`s review of a trial protocol does not necessarily mean that, if the trial is completed, it will
      constitute proof of safety or efficacy (including potency). Further, each clinical trial must be conducted under the auspices of
      an independent Institutional Review Board ("IRB") established pursuant to FDA regulations. The IRB considers, among other
      things, ethical concerns, informed consent requirements and the possible liability of the institution conducting the trials. The
      FDA or IRB may require changes in a protocol both prior to and after the commencement of a clinical trial. There is no
      assurance that the IRB or FDA will permit a trial to go forward or, once started, to be completed.

      The three phases of clinical trials are generally conducted sequentially, but they may overlap. In Phase 1, the initial introduction
      of the drug into humans, the drug is tested for safety, side effects, dosage tolerance, metabolism and clinical pharmacology.
      Phase 1 testing for an indication typically takes at least one year to complete. Phase 2 involves controlled tests in a large but
      still limited patient population to determine the preliminary effectiveness of the drug for specific indications, to determine optimal
      dosage and to identify possible side effects and safety risks. Phase 2 trials typically take at least from one and one-half to two
      and one-half years to complete. If preliminary evidence suggesting effectiveness has been obtained during Phase 2 evaluations,
      expanded Phase 3 trials are undertaken to gather the additional information about safety and effectiveness that is needed to
      evaluate the overall benefit-risk relationship of the product and to provide an adequate basis for physician labeling. Phase 3
      trials for an indication generally take from two and one-half to five years to complete. There can be no assurance that Phase 1,
      Phase 2 or Phase 3 testing will be completed successfully within any specified time period, if at all, with respect to any of the
      Company`s products that have not completed any such testing. Nor can there be any assurance that completion of clinical
      testing will result in FDA approval. Furthermore, the FDA may suspend clinical trials at any time if the patients are believed to
      be exposed to a significant health risk.

      The FDA Modernization Act amended the FDC Act to streamline clinical research on biological and nonbiological drugs.
      Under the new law, a clinical investigation may begin 30 days after the FDA receives an IND application containing
      information about the drug and clinical investigation that includes:

      1. Information about the design of the investigation and adequate reports of basic information, certified by the applicant,
      necessary to assess the drug`s safety in a clinical trial

      2. Adequate information on the chemistry and manufacturing of the drug, controls available for the drug and primary data
      tabulations from animal or human studies.

      The FDA is authorized to halt a clinical study at any time by issuing a clinical hold, confirmed in writing, prohibiting the sponsor
      from conducting the investigation. The clinical hold may be issued based on the FDA`s determination that the drug presents an
      unreasonable risk to the safety of the research subjects, taking into account the qualifications of the investigators, information
      about the drug, the design of the clinical investigation, the conditions for which the drug is to be investigated, and the health
      status of the subjects. Clinical holds also may be imposed by the FDA for other reasons, as established by regulations. The new
      law, however, largely codifies current regulations
      Avatar
      schrieb am 30.03.00 18:24:50
      Beitrag Nr. 4 ()
      albeit with several significant changes. First, it potentially reduces the amount of data required to be submitted as part of an
      IND (most importantly by sanctioning the use of "primary data tabulations from animal and human studies" rather than full
      reports from such studies). Second, it codifies the procedural safeguards for issuance of clinical holds and strengthens certain
      rights of the manufacturer, including the right to obtain a written decision from the FDA regarding the removal of a clinical hold
      within 30 days of a written request from the IND sponsor.

      Under the FDA`s current IND regulations, a number of procedures are available to expedite approval or to allow expanded
      access to investigational drugs. Certain investigational drugs, including products for the treatment of AIDS, can be distributed
      outside of traditional IND requirements on a "treatment" basis. Generally, the FDA may permit an investigational drug, including
      an investigational biological drug, to be used for "treatment" of patients outside of controlled clinical trials, if: (1) the drug is
      intended to treat a serious or immediately life-threatening disease; (2) there is no comparable or satisfactory alternative drug or
      other therapy available to treat that stage of the disease in the intended patient population; (3) the drug is under investigation in
      a controlled clinical trial, or all clinical trials have been completed; and (4) the sponsor of the controlled clinical trial is actively
      pursuing marketing approval of the investigational drug with due diligence. Although the FDA has granted expanded access to
      REMUNE for those patients who are ineligible to enroll in the Phase 3 clinical endpoint trial, the FDA has to date not
      designated expanded access protocols for REMUNE as "treatment" protocols. Either expanded access or a treatment protocol
      designation might permit third party reimbursement of some of the costs associated with making REMUNE available to patients
      in such an expanded access context. There can be no assurance that the FDA will determine that REMUNE meets all of the
      FDA`s criteria for use of an investigational drug for treatment use or that, even if the product is allowed for treatment use, that
      third party payers will provide reimbursement for any of the costs of REMUNE treatment. The FDA Modernization Act also
      amended the FDC Act to permit expanded access to individuals and larger groups to unapproved new therapeutic and
      diagnostic products. Although it largely codified existing FDA regulations in this area, it expands access to all investigational
      therapies. First, it allows the FDA to authorize the emergency shipment of investigational new drugs for the diagnosis,
      monitoring, or treatment of a serious disease or condition. Second, it permits any person, through a licensed physician, to
      request and obtain from a manufacturer or distributor an investigational drug for the diagnosis, monitoring, or treatment of a
      serious disease or condition if the following conditions are met:

      1. A comparable or satisfactory alternative therapy is not available.
      2. There is sufficient evidence of the drug`s safety and effectiveness to permit such use.
      3. The use will not interfere with the conduct of clinical investigations to support marketing approval.
      4. A clinical protocol is submitted to the FDA describing the use of the investigational drug in a single patient or small group of
      patients.

      The law also authorizes expanded patient access to investigational drugs under a treatment IND application.

      The FDA also has issued regulations to accelerate the approval of or to expedite the review of new biological drug products for
      serious or life-threatening illnesses that provide meaningful therapeutic benefit to patients over existing treatments (e.g., the
      ability to treat patients unresponsive to, or intolerant of, available therapy, or improved patient response over available therapy).
      Under the accelerated approval program, the FDA may grant marketing approval for a biological or nonbiological drug product
      earlier than would normally be the case, based on an effect on a surrogate endpoint or a clinical endpoint other than survival.
      Under the program, the sponsor must agree to conduct postmarketing studies to verify and describe the clinical benefits of the
      product. In addition to the accelerated approval process, the FDA has established procedures designed to expedite the
      development, evaluation and marketing of new therapies intended to treat persons with life-threatening and severely debilitating
      illnesses, especially when no satisfactory alternative therapy exists. The term "life-threatening" is defined by the FDA to mean:
      (1) disease or conditions where the likelihood of death is high unless the course of the disease is interrupted and (2) diseases or
      conditions with potentially fatal outcomes, where the endpoint of clinical trial analysis is survival. "Severely debilitating" is
      defined by the FDA to mean diseases or conditions that cause major irreversible morbidity. As a condition of approval, the
      FDA may require the sponsor to conduct certain postmarketing studies to delineate additional information about the drug`s risks,
      benefits and optimal use. The FDA Modernization Act established a new statutory program for the approval of fast track
      drugs, including biological products. Fast track drugs are defined as new drugs or biological products intended for the treatment
      of serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs for such conditions.
      Under the fast track program, a request for designation may be submitted concurrently with, or any time after, submission of an
      IND application. If a product meets the statutory criteria, the FDA is required to designate the product as a fast track drug
      within 60 days of the request for designation. A BLA or NDA for a fast track drug may be approved by the FDA upon a
      determination that the drug has an effect on a clinical endpoint or a surrogate endpoint that is reasonably likely to

      15

      predict clinical benefits. The FDA can condition approval of a fast track drug upon a requirement to conduct post-approval
      studies and submit copies of promotional materials to the FDA prior to dissemination. The law also provides procedures for the
      expedited withdrawal of marketing approval of a fast track. There can be no assurance that the FDA will consider REMUNE,
      or any other of the Company`s products under development, to be an appropriate candidate for accelerated approval, expedited
      review or fast track designation.

      Since 1992, non-biological and biological drugs have been subject to the Prescription Drug User Fee Act of 1992 ("PDUFA").
      PDUFA requires that companies submitting marketing applications for such products pay fees in connection with review of the
      applications. In return, the FDA has committed to reviewing a certain percentage of the applications within certain timeframes.
      For example, in its Fiscal Year 1999 Report to Congress on PDUFA, the FDA reported that 98% of all original premarketing
      applications for biological and nonbiological drugs received in Fiscal Year 1999 were reviewed within 12 months of the
      application submission date. The FDA`s PDUFA performance goal in Fiscal Year 1999 was to complete 90% of such
      applications within 12 months of the submission date. Although PDUFA was scheduled to expire on September 30, 1997, the
      Food and Drug Administration Modernization Act of 1997 reauthorized PDUFA for five years (i.e., until September 30, 2002).
      The FDA has committed for Fiscal Year 2000 to reaching approval, disapproval or additional-data-required decisions on 90%
      of standard original NDAs and to act on 50% of those submissions within 10 months. The FDA has also agreed to act on 90%
      of BLAs filed during fiscal year 2000 within 12 months of receipt of the marketing application and to review and act on 90% of
      priority original NDAs and BLAs (i.e., applications offering significant advances over existing treatments) within six months of
      receipt. There can be no assurance, however, that any BLA the Company submits to the FDA for any of its biological products
      will be reviewed and acted upon within the timeframes set out above. The Company also is subject to regulation under the
      Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource
      Conservation and Recovery Act and other present and potential future federal, state or local regulations. Regulations
      concerning biotechnology may affect the Company`s research and development programs. Furthermore, existing or additional
      government regulations may be applied that could prevent or delay regulatory approval of the Company`s products, or affect the
      pricing or distribution of such products.

      The Company also is subject to foreign regulatory requirements governing human clinical trials and pharmaceutical sales that
      vary widely from country to country. Whether or not FDA approval has been obtained, approval of a product by comparable
      regulatory authorities of foreign countries must be obtained prior to marketing the product in those countries. The approval
      process may be more or less rigorous from country to country and the time required may be longer or shorter than that required
      in the United States. The Company may seek to use foreign marketing partners to assist in obtaining foreign regulatory
      approval for REMUNE and other products.

      EMPLOYEES
      As of December 31, 1999, the Company and its subsidiary had a combined 103 full-time employees, of whom 17 hold Ph.D. or
      other advanced degrees. Of these employees, 78 are engaged in, or directly support, research and development. A significant
      number of the Company`s management and professional employees have had prior experience with pharmaceutical and
      biotechnology companies. None of the Company`s employees are covered by a collective bargaining agreement.

      RISK FACTORS
      THE FAILURE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE PRODUCTS MAY CAUSE US TO
      CEASE OPERATIONS.
      We have not completed the development of any products. A failure to successfully develop and commercialize products may
      cause us to cease operations. Our potential therapies under development will require significant additional research and
      development efforts and regulatory approvals prior to potential commercialization.

      The discontinuation of the Phase 3 trial of REMUNE due to lack of efficacy has had a material adverse effect on us. If
      Agouron Pharmaceuticals, Inc. fails to initiate or successfully complete additional pivotal trials with REMUNE we may have to
      abandon REMUNE or seek additional funding.

      Our other therapies and technologies are at earlier stages of development than REMUNE. Some of our technologies have not
      yet been tested in humans. Human testing of potential products based on these technologies may not be permitted by regulatory
      authorities. Even if human testing is permitted, the products based on these technologies may not be successfully developed or
      be shown to be safe and efficacious. Potential immune-based therapies based on some of our technologies are at an early stage
      of clinical testing and may not be shown to be safe or efficacious or ever receive regulatory approval.

      16

      The results of our preclinical studies and clinical trials may not be indicative of future clinical trial results. A commitment of
      substantial resources to conduct time-consuming research, preclinical studies and clinical trials will be required if we are to
      develop any products. Delays in planned patient enrollment in our clinical trials may result in increased costs, program delays or
      both. None of our potential products may prove to be safe and effective in clinical trials. FDA or other regulatory approvals
      may not be obtained and even if successfully developed and approved, our products may not achieve market acceptance. Any
      products resulting from our programs are not expected to be successfully developed or commercially available for a number of
      years, if at all.

      Unacceptable toxicities or side effects may occur at any time in the course of human clinical trials or, if any products are
      successfully developed and approved for marketing, during commercial use of our products. The appearance of any
      unacceptable toxicities or side effects could interrupt, limit, delay or abort the development of any of our products or, if
      previously approved, necessitate their withdrawal from the market.

      OUR ADDITIONAL FINANCING REQUIREMENTS AND LIMITED ACCESS TO FINANCING MAY
      ADVERSELY AFFECT OUR ABILITY TO DEVELOP PRODUCTS
      We will need to raise additional funds to conduct research and development, preclinical studies and clinical trials necessary to
      bring our potential products to market and establish manufacturing and marketing capabilities. A failure to raise additional funds
      would require us to scale back or eliminate some or all of our research and development programs or license to third parties
      products or technologies that we would otherwise seek to develop ourselves. We believe that our existing resources will enable
      us to maintain our current and planned operations only into the first half of 2001.

      Although we anticipate that the REMUNE development will continue to represent a significant portion of our overall
      expenditures, we also anticipate that costs related to the development of REMUNE will decrease in 2000. Other anticipated
      costs with respect to REMUNE will depend on many factors, in particular the continuation of our collaboration with Agouron.

      Our future capital requirements will depend on many factors, including:

      - continued scientific progress in our research and development programs,

      - the scope and results of preclinical studies and clinical trials, the time and costs involved in obtaining regulatory approvals,

      - the costs involved in filing, prosecuting and enforcing patent claims,

      - competing technological and market developments,

      - the cost of manufacturing scale-up,

      - effective commercialization activities and arrangements, and

      - other factors not within our control.

      We intend to seek additional funding through public or private financings, arrangements with corporate collaborators or other
      sources. If funds are acquired through additional collaborations, we will likely be required to relinquish some or all of the rights
      to products that we may have otherwise developed ourselves. If adequate funds are not available when needed or on terms
      acceptable to us, we may be required to scale back some or all of our research and development programs or license to third
      parties products or technologies that we would otherwise seek to develop ourselves.

      IF AGOURON PHARMACEUTICALS, INC. TERMINATES ITS COLLABORATION WITH US WE MAY
      HAVE TO ABANDON REMUNE
      Our binding Letter of Intent with Agouron is the primary collaborative agreement that provides us with contract revenue. The
      termination of our agreement with Agouron might require us to abandon REMUNE. Agouron has been acquired by
      Warner-Lambert Company. We do not know which Agouron research products Warner-Lambert Company will continue to
      fund in the future.

      WE MAY NOT BE ABLE TO ENTER INTO ADDITIONAL COLLABORATIONS OR MAINTAIN EXISTING
      ONES
      We intend to seek additional collaborative arrangements to develop and commercialize our products. We may not be able to
      negotiate collaborative arrangements on favorable terms, or at all, in the future and our current or future collaborative
      arrangements may not be successful or continue. Under the Schering Corporation collaboration, Schering

      17

      Corporation`s obligation to fund had expired on December 31, 1999. Without funding arrangements, it may cause us to abandon
      some of our products under development.

      OUR PATENTS AND PROPRIETARY TECHNOLOGY MAY NOT PROVIDE US WITH ANY BENEFIT AND THE
      PATENTS AND PROPRIETARY TECHNOLOGY OF OTHERS MAY PREVENT US FROM COMMERCIALIZING
      PRODUCTS
      A failure to obtain meaningful patent protection for our potential products and processes would greatly diminish the value of our
      potential products and processes.

      In addition, whether or not our patents are issued, or issued with limited coverage, others may receive patents which contain
      claims applicable to our products. We are aware that AstraZeneca PLC has acquired the rights to a patent, which has been
      issued in Europe and other countries, that may interfere with our ability to develop some of our technologies related to
      autoimmune disease if the patent is upheld after current opposition proceedings. This patent, and others that we are not aware
      of, may adversely affect our ability to develop and commercialize products.

      The patent positions of biotechnology and pharmaceutical companies can be highly uncertain, and involve complex legal and
      factual questions. Therefore, the breadth of claims allowed in biotechnology and pharmaceutical patents cannot be predicted.
      We also rely upon unpatented trade secrets and know how, and others may independently develop substantially equivalent trade
      secrets or know how.

      We also rely on protecting our proprietary technology in part through confidentiality agreements with our corporate
      collaborators, employees, consultants and certain contractors. These agreements may be breached and we may not have
      adequate remedies for any breach. In addition, our trade secrets may otherwise become known or independently discovered by
      our competitors.

      Our products and processes may infringe, or be found to infringe, patents not owned or controlled by us, such as the patent
      owned by AstraZeneca PLC. If relevant claims of third-party patents are upheld as valid and enforceable, we could be
      prevented from practicing the subject matter claimed in the patents, or would be required to obtain licenses to redesign our
      products or processes to avoid infringement. Licenses may not be available at all or on terms commercially reasonable to us
      and we may not be able to redesign our products or processes to avoid infringement.

      Litigation may be necessary to defend against claims of infringement, to enforce patents issued to us or to protect trade
      secrets. Litigation could result in substantial costs and diversion of management efforts regardless of the results of the litigation.
      An adverse result in litigation could subject us to significant liabilities to third parties, require disputed rights to be licensed or
      require us to cease using some technology.

      OUR HISTORY OF OPERATING LOSSES AND OUR EXPECTATIONS OF CONTINUING LOSSES MAY
      HURT OUR ABILITY TO CONTINUE OPERATIONS
      As of December 31, 1999 we had a consolidated accumulated deficit of $186.5 million. We have not generated revenues from
      the commercialization of any product. We expect to incur substantial net operating losses over the next several years which
      may imperil our ability to continue operations. We may not be able to generate sufficient product revenue to become profitable
      at all or on a sustained basis.

      THE LENGTHY APPROVAL PROCESS AND UNCERTAINTY OF GOVERNMENT REGULATORY
      REQUIREMENTS MAY DELAY OR PREVENT US FROM COMMERCIALIZING PRODUCTS Clinical testing,
      manufacture, promotion and sale of our products are subject to extensive regulation by numerous governmental authorities in
      the United States, principally the FDA, and corresponding state and foreign regulatory agencies. This regulation may delay or
      prevent us from commercializing products. Noncompliance with applicable requirements can result in, among other things, fines,
      injunctions, seizure of products, total or partial suspension of product marketing, failure of the government to grant premarket
      approval, withdrawal of marketing approvals and criminal prosecution.

      The regulatory process for new therapeutic drug products, including the required preclinical studies and clinical testing, is
      lengthy and expensive. We may not receive necessary FDA clearances for any of our potential products in a timely manner, or
      at all. The length of the clinical trial process and the number of patients the FDA will require to be enrolled in the clinical trials
      in order to establish the safety and efficacy of our products is uncertain.

      Even if additional pivotal surrogate marker trials of REMUNE are successfully completed, the FDA may not approve
      REMUNE for commercial sale. We may encounter significant delays or excessive costs in our efforts to secure necessary
      approvals. Regulatory requirements are evolving and uncertain. Future United States or foreign legislative or

      18

      administrative acts could also prevent or delay regulatory approval of our products. We may not be able to obtain the necessary
      approvals for clinical trials, manufacturing or marketing of any of our products under development. Even if commercial
      regulatory approvals are obtained, they may include significant limitations on the indicated uses for which a product may be
      marketed.

      In addition, a marketed product is subject to continual FDA review. Later discovery of previously unknown problems or failure
      to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of
      the product from the market, as well as possible civil or criminal sanctions.

      Among the other requirements for regulatory approval is the requirement that prospective manufacturers conform to the FDA`s
      Good Manufacturing Practices, GMP, requirements specifically for biological drugs, as well as for other drugs. In complying
      with the FDA`s GMP requirements, manufacturers must continue to expend time, money and effort in production,
      recordkeeping and quality control to assure that the product meets applicable specifications and other requirements. Failure to
      comply with the FDA`s GMP requirements subjects the manufacturer to possible FDA regulatory action. We or our contract
      manufacturers, if any, may not be able to maintain compliance with the FDA`s GMP requirements on a continuing basis. Failure
      to maintain compliance could have a material adverse effect on us.

      The FDA has not designated expanded access protocols for REMUNE as "treatment" protocols. The FDA may not determine
      that REMUNE meets all of the FDA`s criteria for use of an investigational drug for treatment use. Even if REMUNE is
      allowed for treatment use, third party payers may not provide reimbursement for the costs of treatment with REMUNE.

      The FDA may not consider REMUNE or any other of the Company`s products under development to be an appropriate
      candidate for accelerated approval, expedited review or fast track designation.

      To market any drug products outside of the United States, we are also subject to numerous and varying foreign regulatory
      requirements, implemented by foreign health authorities, governing the design and conduct of human clinical trials and
      marketing approval. The approval procedure varies among countries and can involve additional testing, and the time required to
      obtain approval may differ from that required to obtain FDA approval. The foreign regulatory approval process includes all of
      the risks associated with obtaining FDA approval set forth above, and approval by the FDA does not ensure approval by the
      health authorities of any other country.

      TECHNOLOGICAL CHANGE AND COMPETITION MAY RENDER OUR POTENTIAL PRODUCTS OBSOLETE
      The biotechnology industry continues to undergo rapid change and competition is intense and is expected to increase.
      Competitors may succeed in developing technologies and products that are more effective or affordable than any which are
      being developed by us or which would render our technology and products obsolete and noncompetitive. Many of our
      competitors have substantially greater experience, financial and technical resources and production, marketing and development
      capabilities than us. Accordingly, some of our competitors may succeed in obtaining regulatory approval for products more
      rapidly or effectively than us.

      OUR LACK OF COMMERCIAL MANUFACTURING AND MARKETING EXPERIENCE MAY PREVENT US
      FROM SUCCESSFULLY COMMERCIALIZING PRODUCTS
      We have not manufactured our product candidates in commercial quantities. We may not successfully make the transition from
      manufacturing clinical trial quantities to commercial production quantities or be able to arrange for contract manufacturing and
      this could prevent us from commercializing products. Even if REMUNE is successfully developed and receives FDA approval,
      we have not demonstrated the capability to manufacture REMUNE in commercial quantities. Except for REMUNE, we have
      not demonstrated the ability to manufacture our treatments in large-scale clinical or commercial quantities.

      We have no experience in the sales, marketing and distribution of pharmaceutical products. Thus, our products may not be
      successfully commercialized even if they are developed and approved for commercialization.

      The manufacture process of our products involves a number of steps and requires compliance with stringent quality control
      specifications imposed by us and by the FDA. Moreover, our products can only be manufactured in a facility that has
      undergone a satisfactory inspection by the FDA. For these reasons, we would not be able quickly to replace our manufacturing
      capacity if we were unable to use our manufacturing facilities as a result of a fire, natural disaster (including an earthquake),
      equipment failure or other difficulty, or if such facilities are deemed not in compliance with the FDA`s GMP requirements and
      the non-compliance could not be rapidly rectified. Our inability or reduced capacity to manufacture our products would prevent
      us from successfully commercializing products.
      Avatar
      schrieb am 30.03.00 23:51:06
      Beitrag Nr. 5 ()
      Hi Dj-Cool,

      danke für den vollständigen Text. Ich selbst habe nur einen Ausschnitt daraus gehabt. Wo hast Du ihn gefunden?

      MfG, Patagonier


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