BioWorld International Correspondent

MUNICH, Germany - Two German biotech companies have begun a partnership that attempts to build a close cooperation, without requiring the integration of a full merger or endangering either company's current line of business.

DeveloGen AG, of Gottingen, is a privately held drug discovery company with about 100 employees that specializes in therapies for diabetes and obesity. Evotec OAI AG, of Hamburg, arose from the merger of public German and English companies, and now has more than 600 employees.

The firms described their partnership as an integrated venture of at least two years that will combine DeveloGen's pipeline of more than 200 primary and 30 validated targets with Evotec's capabilities from screening to medicinal chemistry and drug manufacturing. Jasper Wiklund, vice president of business development for DeveloGen, told BioWorld International, "The bottom line of what we are doing is taking the entire line of targets from three years of functional genomics and validation and using that as leverage in a larger market. Our targets with Evotec's capabilities bring out integrated drug discovery capability.

"By the end of this year, we will have approximately 40 people from both sides working on the limited number of initial targets to have a case study that we can build partnerships [with pharmaceutical companies] from," Wiklund said. "It's a way of achieving forward integration without having to merge." The companies already are cooperating on activities from target validation to lead optimization in a number of development programs. They anticipate forming alliances to accommodate later-stage development and commercialization.

DeveloGen focuses on therapies for metabolic disorders, such as obesity and diabetes, based on model organisms and elucidating mechanisms involved in stem cell differentiation. The company said that because its model organism screening starts with a metabolic phenotype, it is more rapid and relevant to diseases than conventional functional genomics methods. DeveloGen's platform also incorporates harnessing key developmental control genes involved in stem cell differentiation and tissue regeneration. "We are concentrating on obesity, Type II diabetes and the combination of characteristics known as metabolic syndrome," Wiklund said. "Our targets in these areas were originally identified because they attacked obesity directly, and others are involved in fat metabolism."

The company has raised more than €60 million in investment since its founding in 1998. Wiklund said that DeveloGen's current cash position was sufficient for up to three years.

"Rather than doing a limited target deal [with Evotec], we'd prefer to share costs and upside," Wiklund said. Evotec will not, however, move into a role of developing drugs. The company emphasized that it did not intend to market products or to compete with its customers. It would license its rights as part of an eventual pharmaceutical partnership.

Evotec also said that the financing for the deal would come from existing funds and would not affect its goal of being in the black for the year.

The partnership with Evotec may be just the first structural innovation from DeveloGen. "We have been undergoing the transformation from a functional genomics company to a product company," Wiklund said. "This partnership is one very important step in that direction, but other things are coming."