By Mary Welch

Staff Writer

In a deal potentially worth more than $125 million, Maxygen Inc. signed a five-year research pact with Zeneca Agrochemicals to develop input and output traits for several crops.

Privately held Maxygen will receive a $5 million up-front equity investment together with more than $20 million in research and development funding and licensing fees over the course of the collaboration. In addition, the Redwood City, Calif., company could receive milestone payments of more than $100 million, plus royalties on product sales.

"The $5 million equity position is not a controlling interest in the company," said Jeannine Medeiros, investor and public relations manager for Maxygen. "There is no cap on the milestones. The milestone payments are significantly greater than what is called for in our deal with Pioneer, so we are comfortable saying they could total more than $100 million."

Earlier this year Maxygen signed a deal worth up to $85 million with Pioneer Hi-Bred International Inc., of Des Moines, Iowa, to accelerate the development of advanced crop genetics in corn, soybeans and other crops. That contract also included a $5 million equity investment in Maxygen. (See BioWorld Today, Jan. 26, 1999, p. 1.)

Maxygen's technology, molecular breeding, also known as DNA shuffling, can create new properties of a protein or polynucleotide through the evolution of its DNA sequence. Molecular breeding can be applied to a wide range of targets, including individual genes that encode proteins or enzymes, whole plasmids or viruses, and multigene clusters that encode metabolic pathways.

London-based Zeneca Agrochemicals has a number of "strategic crops" that include cereals, horticultural items such as tomatoes and potatoes, oil seeds, sugar beets and grasses.

"We cannot be too specific about what we are doing or for what strategic crops," Medeiros said. "But we will be improving these crops' input traits, such as protecting them against diseases, insects and herbicides, and output traits, such as general nutritional value and starch."

The latest collaboration does not conflict with Maxygen's accord with Pioneer, she said. "Pioneer is focused on specific products and the specific input and output traits for each of those products," Medeiros said. "Not only is there no conflict, but there is room for us to establish additional partnerships with other agricultural companies as well as conduct internal work for ourselves."

Maxygen was formed in 1997 as a spin-off of London-based Glaxo Wellcome plc and Affymax Research Institute, of Santa Clara, Calif., which is a wholly owned subsidiary of Glaxo. Pim Stemmer, a former Affymax scientist, developed the technology and founded Maxygen with Alejandro Zaffaroni, Russell Howard and Isaac Stein.

Last month Maxygen raised $20 million in a private placement from new and existing investors. (See BioWorld Today, July 15, 1999, p. 1.)

"We're in a great cash position now," Medeiros said. "We are looking at an IPO [initial public offering] in the near future but we have no immediate plans."

Zeneca Agrochemicals is a division of London-based AstraZeneca Group plc.