San Francisco Chronicle - The Voice of the West, 901 Mission Street, San Francisco, CA 94119 - Friday, January 17, 1997 - Page B1
Carl T. Hall, Chronicle Staff Writer

The drugs became front-page news last year when the FDA began approving them to help stop the spread of HIV.

But now pharmaceutical companies, including tiny South San Francisco- based Arris Pharmaceutical Corp., are crafting new protease inhibitors for dozens of hard-to-treat health problems, including asthma, osteoporosis, blood-clotting disorders and such viral infections as herpes and hepatitis. Protease inhibitors someday could even help against the common cold.

"We've found a pretty fertile area to work in," claimed Arris chief executive John Walker.

Drug giants Merck & Co., Bayer, SmithKline Beecham and Pharmacia & Upjohn are each collaborating with Arris in what Walker called "four very broad market areas where proteases play an important role."

The collaborations have generated $60 million in research payments for Arris so far. Another $200 million is promised if certain milestones are met. Thanks to such payments, Arris has spent only $2 million of its own cash over the past four years, even though it has 160 employees and plans to hire 30 more this year.

The deals hold out the possibility of double-digit royalties for Arris if the research yields any commercial products.

That's hardly a sure bet. The research is all in the early stages, and even if there are successes, other companies could get there first.

Nevertheless, analysts note that only Arris has mounted such a broad attack on one of the pharmaceutical industry's most fashionable targets.

"Protease is their raison d'etre," said Michael King, stock analyst at Vector Securities International Inc. in Chicago. "Every pharmaceutical company now is looking for protease inhibitors, and Arris knows protease better than anybody." Proteases are naturally occurring enzymes that break down proteins. In the best-known example, the AIDS virus uses a protease to dismantle healthy proteins and uses them to build new viruses. By thwarting the protease, drugs such as Merck's Crixivan or Agouron's Viracept, when taken in combination with other antivirals, seem to stop disease from spreading.

Viral proteases make up just one of many classes of the enzymes. AIDS popularized the term, but it's been part of the scientific vernacular -- sometimes spelled "proteinase" -- since the late 19th century.

The AIDS drugs aren't the first protease inhibitors to hit the big time. The so- called ACE inhibitors, a multibillion-dollar-a-year category of medications for high blood pressure, also act on a form of protease called angiotensin converting enzyme.

"Proteases are everywhere," said Charles Craik, a biochemist at the University of California at San Francisco. "There isn't a biological function that does not have a protease associated with it."

Take sex, for example: The head of every sperm cell is packed with a protease the sperm uses to chew through the wall of the egg to complete fertilization.

Another protease, called tryptase, helps trigger asthmatic reactions. A tryptase inhibitor for asthma is Arris's leading drug candidate, having already shown encouraging results in small-scale clinical testing. Along with collaborators at Bayer, Arris hopes to end up with a pill that asthma sufferers could swallow to render themselves immune from attack.

Asthma "is like an avalanche," stock analyst King noted. "If you can prevent the first snow pile from sliding down the hill, you have a much better chance of stopping the whole thing." Other proteases are involved in the formation of blood clots and in the bone disease osteoporosis.

Drugs are usually designed to inhibit protease. Perhaps the biggest hurdle to developing useful protease drugs is the fact that the enzymes are so prevalent. Side effects can be overwhelming unless drug designers can find a way to limit a drug's action to where it's desired.

"Since proteases are omnipresent in the body," explained UCSF scientist Craik, "there's always been a lot of skepticism that you could make an effective drug against any one protease without it being too toxic due to side effects." Arris scientists claim to have hit on a winning strategy, code-named "Delta," that dramatically speeds up protease drug development, at least in the case of two big families of proteases called serine and cysteine. Arris won't give details while it is applying for patents. "Nobody knows what Delta really is," said Carl Gordon, a stock analyst at Mehta & Isaly in New York.

That mystery -- as well as the dearth of hard clinical proof that the Arris game plan works -- helps explain why the company has a relatively modest market value of around $200 million. The company's stock made its debut on Nasdaq in 1993 at $7 a share. It closed yesterday at $13.50.

Gordon said the "big-pharma" development deals are helping to reassure some skeptics, even though it will be two years at best before the company sells its first product.

"When a company like Merck goes to work with a company like Arris, you have to figure they must know something," he said. ------------------------------------------------------------

THE PREVALENCE OF PROTEASES

Proteases are found throughout the body and play a role in many diseases besides aids. Here are three examples:

ASTHMA

A form of protease, called tryptase, stimulates production of chemicals such as histamine, which may cause asthmatic

attacks.

OSTEOPOROSIS

Osteoclast cells attach to the surface of the bone and release a protease called Cathepsin K that, under certain circumstances, eats away bone.

CLOTTING

Proteases -- called Factor Xa, Factor VIIa and thrombin -- contribute to formation of blood clots at the site of a damaged blood vessel. When proteases run amok, excessive clotting (thrombosis) can occur.

Source: Arris Pharmaceutical
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