Protein Pathways Inc. hasn't been on the drug discovery trail for long, but a recent endorsement is helping to map out its near-term future.

The Woodland Hills, Calif.-based company is being commissioned by Merck & Co. Inc., which plans to use Protein Pathways' ProNexus drug discovery technology in its own research efforts. The technology is designed to help researchers negotiate the sometimes-foggy cellular pathways. ProNexus works to predict, integrate and analyze protein interactions from multiple data sources to identify therapeutically relevant genes in specific disease pathways.

"This demonstrates that a company like Merck believes that the methods we were using were valid based on the results we obtained," Protein Pathways Chairman and CEO Daniel Vapnek told BioWorld Today. "It is worth their time and effort to have a program with us where we would demonstrate that we could carry out a similar ability to identify new targets in the area that they are interested in."

While financial terms and details relating to the nature of the targets of interest to Whitehouse Station, N.J.-based Merck were not disclosed, its validation of ProNexus is not lost on Protein Pathways. In the near term, the agreement fits perfectly into the company's business model.

"In the long run we would like to become a drug development company," Vapnek said. "In the short run, we see agreements with pharmaceutical companies on pathways as being the first step to doing this."

He added that initial agreements of such a contractual nature eventually would position Protein Pathways for co-development work.

Formerly the senior vice president of research at Thousand Oaks, Calif.-based Amgen Inc., Vapnek joined the board at Protein Pathways two years ago and was named its chairman and CEO in February 2002. The company was founded in April 1999 on technology developed by the chairman of its scientific advisory board, David Eisenberg, who remains a professor at the University of California at Los Angeles. Other founders include Todd Yeates, another UCLA professor, as well as Matteo Pellegrini, who worked as a post-doc with Eisenberg and Yeates in creating the company's technology. Now he is the president of Protein Pathways, which exclusively licensed the technology from the university.

"ProNexus involves a suite of computational methods developed initially at UCLA, and a series of other methods developed at the company," Vapnek said. "The goal of these methods is to develop complete biochemical pathways."

He said that ProNexus would play a role in answering questions brought on by the finished sequence of the human genome - how do gene products fit into such biochemical pathways? Partial pathways must be more clearly defined by finding additional members of the pathways.

The company said it is developing a portfolio of disease pathways, using ProNexus to identify genes implicated in a specific pathway, within which reside targets of possible drugs.

Protein Pathways' approach entails bioinformatics and computational methods, on which the company experimentally demonstrates that such predicted members indeed are found in the pathways. The company has worked on the T-cell pathway, involved in autoimmune disease, and the rank pathway, implicated in osteoporosis.

"The computational step narrows down the number of potential new members of a pathway," Vapnek said. "In our database, we have more than 20,000 different genes with over 200,000 different interactions that we believe these genes participate in. In the pathways, we can go down from 20,000 genes with 200,000 interactions to a small, manageable number."

He said the narrowed focus has resulted in high hit rates through the experimental side of its approach in in vitro cell culture systems. Vapnek added that the application of ProNexus could produce new uses for marketed drugs or resurrect abandoned drugs that have failed prior clinical testing because of a lack of efficacy.

"We have a database of about 570 drug targets that have been identified, and the 5,000 chemical compounds that have been used to inhibit these," he said. "In several cases we have found examples where we think that a drug has a different use - the reason efficacy was not discovered is because they looked at the wrong target. We have been able to link some of these 500-odd targets to different pathways using our database of the 20,000 proteins and the 200,000 interactions."

Such validations of its methodology bode well for Protein Pathways' internal drug development intentions, though its current funding status inhibits much movement in that area.

Vapnek said the company has raised about $8 million to date from private individuals, adding that the 10-employee operation will not see much growth in that department either until Protein Pathways elicits a round of venture capital funding or significant funding from a pharmaceutical partner. He said such funding could come within the next year.

In addition to seeking venture capital financing, Vapnek said Protein Pathways also is considering a merger with another company with complementary technology.