Merck & Co. Inc. must have liked what it saw in Norak Biosciences Inc.'s Transfluor technology, because the Whitehouse, N.J.-based pharmaceutical company has returned for a broader license.

Norak, of Morrisville, N.C., signed a second license agreement granting Merck the right to use Transfluor for G protein-coupled receptor drug discovery.

"The deal in 2002 was for three receptors and it was limited access, and as part of that deal Norak was responsible for providing all of the assay development for the screens that Merck was going to do against those three receptors," said Terry Willard, Norak's executive vice president. "This deal is a broad, unrestricted access to the Transfluor technology where they can screen any number of GPCR targets of interest with Transfluor they want."

Merck, a company that only last week pulled its painkiller Vioxx from worldwide markets after clinical data showed an increased risk of heart attack and stroke in patients taking the drug for 18 months or more, will broadly use the Transfluor technology with GPCR targets of interest. Norak's technology is designed to be the most direct and accurate method for screening potential drug candidates against GPCR targets, whether known or orphan. Norak's founders, Marc Caron, Robert Lefkowitz and Larry Barak, discovered a unique pathway common to all GPCRs known as desensitization, which defines the issues related to drug tolerance for GPCR drugs.

"Traditionally, the GPCR drugs lose effectiveness over time," Willard told BioWorld Today. "Therefore, you either have to increase the dose or increase the frequency of the dose to maintain efficacy levels, and that leads to toxicity."

Merck first licensed limited rights to the Transfluor technology in 2002, with Norak providing cell line development. Founded in 1999, Norak acquired the technology through Duke University Medical Center at which the company's three founders conducted research into GPCR-signaling pathways over several decades.

The company's 10 licensees for the technology include London-based AstraZeneca plc; Basel, Switzerland-based F. Hoffmann-La Roche Ltd.; and Copenhagen, Denmark-based H. Lundbeck A/S. The National Cancer Institute and the Development Center for Biotechnology in Taiwan also have licensed Transfluor.

"We've had deal announcements for Roche in September, and Lundbeck in July. Now this is for Merck," Willard said. "The significance is each of our early collaborators is now coming back. They've licensed the technology, they've had good experience with it, and now they're coming back to get more access."

While specific financial terms of Norak's license agreements are rarely disclosed, Willard said some include milestone payments and potential royalties, and others do not. Typically, large pharmaceutical companies refuse to provide milestones and royalties to early stage technology companies, he said.

"Because we're a small biotech, cash is king around here," he said. "We try to get as much cash up front if we can, and if we have to forgo milestones and royalties to do that, we will."

The company raised $13 million in its Series B financing in February 2002, and since has conducted a bridge financing with current investors. Since inception, Norak has raised $20 million. Willard anticipates returning to private investors in the first half of 2005 to conduct a Series C round. The company has no plans to file for an initial public offering any time soon.

"The financial markets are such that they prefer to see these days clinical-stage products before you're IPO-able,'" Willard said. "And with our current pipeline, we're still a couple of years away from that."

Some of the company's collaborators will publicly share what they've discovered with the Transfluor technology later this year. In its internal programs, Norak is advancing some of its own discoveries into lead optimization. But nothing is ready to enter the clinic.

As with Merck, Transfluor's licensees are searching for GPCR-targeted compounds for a wide variety of indications.

"They're the largest class of druggable receptors in drug discovery research," Willard said, "so they have a very broad therapeutic utility."

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