Xenova Ltd. announced Friday that it has formed a $15 millioncollaboration with Suntory Ltd. of Japan to discover anddevelop new small molecule drugs for treating immune-inflammatory disease, especially rheumatoid arthritis.

Xenova will receive up to $12 million in up-front fees, researchpayments and milestone payments from Suntory, which willalso make a $3 million equity investment in the Slough,England, drug discovery company. There may be payments foradditional product development milestones in the future, aswell.

In turn, Suntory receives the exclusive rights to market anyresulting products in Southeast Asia, and shares marketingrights with Xenova for the rest of the world, excluding Europe.Xenova gets exclusive marketing rights in Europe.

Xenova will use its collection of more than 24,000 fungi andbacteria, as well as a drug screening method dubbed Asset, todiscover potential drugs, after which both companies intend todevelop those drugs jointly.

This is the latest in Xenova's international collaborations ondrug discovery. The company has ongoing agreements withGenentech Inc., which is also a shareholder.

Genentech's total equity investment in Xenova topped $10million in January. As well, Genentech and Xenova reached anagreement in Oct. '91 worth $10 million in support for researchon cardiovascular disease, autoimmune and inflammatorydisorders and growth regulation.

Xenova is also collaborating with Warner-Lambert Co. (a five-year agreement reached in January 1992 on drugs forcardiovascular disease and neurological disorders); F.Hoffmann-La Roche Ltd. (to which Xenova granted rights todevelop certain microbially derived small molecules asimmunosuppressants in April 1992); and Genzyme Corp. (acollaboration formed in April 1992 to develop small moleculetherapeutics for several inflammatory diseases, especiallyrespiratory diseases).

-- Jennifer Van Brunt Senior Editor

(c) 1997 American Health Consultants. All rights reserved.