Amgen and Start-Up Firm Join in Research : Biotechnology: The agreement involves a company developing a potential rival to the Thousand Oaks giant’s anemia drug.

Amgen Inc., the biotechnology giant in Thousand Oaks, has quietly struck a research deal with an obscure start-up company in South San Francisco, in effect buying the rights to a potential rival to Amgen’s blockbuster anemia drug.

The three-year agreement calls for Amgen to fund research and development at Arris Pharmaceutical Corp. Arris is trying to develop a pill or oral version of Amgen’s Epogen (EPO), a drug that fights anemia in kidney-dialysis patients by boosting red blood cell production.

Epogen was approved for U. S. sales in 1989 and generated revenue of $506 million last year for Amgen. But like the other 15 or so biotechnology drugs now for sale in the country, Epogen is in liquid form and must be administered intravenously.

Arris is trying to design an oral drug that would mimic the effects of Epogen, and presumably the new drug would not infringe on Amgen’s broad patents for Epogen. Although scientists say an oral form of EPO is at least a few years away, if it came to the market it would very likely be more convenient to use than Epogen and could put a big dent in Amgen’s sales.

Jim McCamant, editor of the Medical Technology Stock Letter in Berkeley, said Amgen’s agreement with Arris was a step toward buying up a potential rival. “If you’re going to have somebody obsolete your drug, you’d like to have it yourself,” he said.

Under the pact with Arris, Amgen will have manufacturing and marketing rights on any jointly developed drug, with Arris receiving royalties on Amgen’s sales.

Daniel Vapnek, Amgen’s senior vice president for research, declined to say whether any specific product was behind Amgen’s agreement with Arris. But he confirmed that the area of Arris’ research that Amgen would fund included anything related to EPO, the gene-spliced copy of erythropoetin, a human protein that triggers production of red blood cells.

“One of the things we’re obviously interested in is the next generation” of biotechnology drugs that are in oral form, Vapnek said.

Joan Kureczka, a spokeswoman at Arris, said Amgen sought out Arris and then pursued the agreement. She also declined to comment on any specific project.

Amgen also agreed to pay an upfront fee, but did not buy an equity stake in Arris, a privately held firm that analysts consider promising because of its talented staff. Financial terms of the collaboration were not released.

The agreement is the latest of several Amgen has struck with smaller biotechnology companies in an attempt to add to its hollow product pipeline.

Amgen’s revenues were $1.1 billion last year on the success of Epogen and its other drug, Neupogen, which helps the body’s immune system by stimulating infection-fighting white blood cells and is used on cancer and AIDS patients. But the company’s quest to develop a third drug has proven elusive, despite heavy investments in research.

Arris was formed in April, 1989, and is also pursuing drugs for asthma and atherosclerosis, which are not part of the agreement with Amgen. Analysts say Arris’ biggest asset is its personnel, including President Michael J. Ross, who spent 12 years building up the research program at Genentech Inc., the nation’s first successful biotechnology firm, which is in San Francisco.

Arris’ eclectic research staff includes molecular biologists, chemists and computer scientists. Arris is also collaborating with Harvey Lodish, a scientist who did early research on EPO and is now with the Whitehead Institute for Biomedical Research in Massachusetts.

McCamant said Arris fits well with Amgen’s specific needs and is also part of Amgen’s strategy in the final two years to team up with smaller biotech companies. Before the Arris agreement, Amgen’s last collaboration was announced in January with Sugen Inc. in Redwood City. That pact called for the two companies to jointly develop new drug treatments for blood-related disorders.