National Editor

Less than a month after raising $42.7 million in a Series B round, GenPath Pharmaceuticals Inc. said it has nailed down a multiyear cancer deal with Merck & Co. Inc. worth up to $100 million, excluding royalties.

"We didn't have to go and knock on people's doors," said Tuan Ha-Ngoc, president and CEO of Cambridge, Mass.-based GenPath. "Merck came to us."

Under the terms, Merck is providing an undisclosed up-front payment plus research funding, as well as potential milestones and royalties. GenPath in return will use its cancer models to identify essential tumor maintenance genes that may be targets for small-molecule drugs.

In the deal, GenPath will deploy its inducible, spontaneous tumor models in mice to help select and optimize compounds. Merck, of Whitehouse Station, N.J., gets an exclusive option to worldwide rights for a specified number of targets, also undisclosed, and is responsible for discovery, clinical development and commercialization.

Privately held GenPath creates a tumor in the mouse, and then applies functional genetics screening techniques to identify genes in vivo that are essential to the growth of the tumor, thus establishing causality. Once scientists identify genes that are key to the tumor's growth maintenance phase, drugs can be devised to cause it to regress, the company said.

"The biggest issue in cancer research is to come up with the right genes to focus on and test the right animal model," Ha-Ngoc told BioWorld Today. "A lot of people think they have validated targets, but they can't reproduce the biology in a relevant setting."

But GenPath can, he said.

"We have set up basic tumor models to work with Merck on," he said, adding that the first cancer indication is "likely to be one of the big four" - breast, lung, colon or prostate. The decision won't be based on market size alone, though, he said.

"The marketing people will be happy [if you do that], but unless you have a unique insight into the pathway, you will not have the right drug," Ha-Ngoc noted, adding that "most likely the genes would be useful in a range of tumors."

The mouse, which he said more faithfully produces human disease than previous animal models, will tell.

"That's the engine that's going to help us and Merck and maybe future collaborators to have a relevant biological model to discover the right genes, evaluate the right compounds and decide what are the right sub-patient populations to go after with clinical trials," he said. "Nobody has been able to do the same thing."

How soon a drug might come out of the deal is unclear, but "certainly not in the first couple of years," Ha-Ngoc said. "It could be anywhere between three and four years before we see the first drug in the clinic. We'd like to see it earlier, but we don't want to over-promise things."

GenPath raised $42.7 million early last month, its second financing since the company started in May 2002, when a Series A round netted $15.5 million. (See BioWorld Today, May 20, 2002, and Oct. 3, 2003.)