National Editor

About two months after spinning off a therapeutics company based on its high-throughput technology, Symyx Technologies Inc. has entered a five-year deal worth at least $200 million to apply the same methods in research with fuel giant ExxonMobil.

Symyx's stock (NASDAQ:SMMX) closed Tuesday at $19.20, up $2.87, or 17.6 percent.

The deal "doesn't have anything whatsoever to do with that subsidiary working in the drug-discovery field," Steven Goldby, chairman and CEO of Santa Clara, Calif.-based Symyx, said during a conference call. Instead, it dramatically broadens a relationship already in place with ExxonMobil, of Irving, Texas.

"Since we've been working with them for two and a half years, they've had ample opportunity to see what our people and our technology can do," Goldby said.

ExxonMobil's program with Symyx will establish high-throughput research laboratories deploying the latter's Renaissance informatics software, and Symyx expects to reap upwards of $200 million in alliance activities, purchases of discovery tools and licensing fees. Symyx also could get royalties from products developed through the arrangement.

ExxonMobil earlier acquired tools for polymerization catalyst discovery from Symyx and, for the past year, the pair has been working under an agreement that covers several applications in olefins technology and associated tool development.

Symyx's revenue guidance for 2003 remains at $75 million to $85 million, with operating income of $7 million to $8 million expected, and earnings at 15 cents to 20 cents per diluted share.

Ramping up of the ExxonMobil deal just entered was anticipated in the 2003 revenue guidance, but expenses will rise as Symyx adds employees to achieve the collaboration's goals.

Jeryl Hilleman, chief financial officer for Symyx, said during the conference call that the company had decided to "expand our headcount far in advance of what we had initially thought to do." Having started 2003 with 210 employees, it will end with 250, she said.

More details about earnings and expenses will be forthcoming during the second-quarter call Thursday, Hilleman said.

Symyx and ExxonMobil pointed out the pharmaceutical industry has used high-throughput experimenting methods to cut research cycles by 50 percent to 90 percent; increase the probability of success in the discovery phase from 20 percent to more than 50 percent; and significantly lower the cost per experiment. The pair hopes to do the same in developing chemicals, lubricants and fuel products.

Although, like any other deal, the one with ExxonMobil has some exclusivity provision, Goldby said Symyx "[continues] to have substantial research activities with important competitors of ExxonMobil. There's certainly room in the untaken and open fields" for more deals ahead, he added.

In May, Symyx spun off Symyx Therapeutics Inc. with $8 million in funding from a Series A round led by The Sprout Group, with 5am Ventures also participating. The two Menlo Park-based financiers gained a majority interest in the spin-off, with Symyx Technologies retaining the rest. (See BioWorld Today, May 12, 2003.)

An analyst questioned Goldby during the conference call about how Symyx has "oscillated between chemicals/materials vs. health care," which may have been confusing for some investors.

"We, I hope, are unambiguous about this," he said, noting that Symyx through the ExxonMobil deal and others is "addressing the chemical-research marketplace. We're [also] continuing to address the pharmaceutical development space," he said.

The therapeutics spin-off, Hilleman said, is "at this point a separate company. We are leasing space to them and at some point they will be moving into their own premises."