BioWorld International Correspondent

LONDON - De Novo Pharmaceuticals Ltd. sold the first license for its drug discovery software to Eli Lilly and Co., following a restructuring late last year that saw De Novo abandon in-house product development to focus on commercializing its platform technology.

Bart Wuurman, who became CEO of De Novo in November, acknowledged it was a "step against the trend" to move out of product development, but told BioWorld International: "We have world-class technology - I really think it is the best computational technology around - and we're doing in-house discovery other people could do as well, if not better. Over the past year and a half we have patented 10 families of chemical structures, but we would have to spend a considerable amount of money to get them to the point of licensing."

By closing the drug discovery laboratories and cutting the number of employees from 48 to 23, Cambridge-based De Novo will make its £4 million (US$7.4million) cash last until the second half of 2005, even if it doesn't sign another deal, but Wuurman said "the aim is that cash-generating deals will see us breaking even in 2005."

The nonexclusive license agreement with Lilly, of Indianapolis, is De Novo's first commercial sale, but its structure-based drug discovery product, Skelgen, was validated in a technology development collaboration with Basel, Switzerland-based F. Hoffmann-La Roche Ltd., which now is applying it in active projects.

"The Lilly deal is significant for us as the first real deal," Wuurman said. "We will now concentrate on technology licensing to big pharma and offer more tailored services for smaller companies that don't have the computational ability to turn targets into leads."

Skelgen is a structure generator, incorporating synthetic chemistry know-how that makes it possible to generate chemical entities within protein target sites in silico, and provides reaction chemistry for their preparation. The technology was developed originally by the drug design group of the Department of Pharmacology at Cambridge University. It was spun out in 1999, and De Novo has raised $28 million in two funding rounds, the most recent in July 2001.

"We raised a lot of money in the first two rounds, and at the moment I'm not thinking of trying to raise any more," Wuurman said. However, he is interested in finding merger partners to extend the technology reach of De Novo. "At the moment we are just one piece of the jigsaw."

Wuurman believes pharma's appetite for drug discovery technology will hold up. "We have done some market research, which shows us this is especially so in the chemical area, because companies are getting lots more targets, and high-throughput screening isn't good enough.

"They are looking for a more intelligent approach. Rather than looking for a needle in a haystack, we are telling them we can make the needle."