Sunesis Pharmaceuticals Inc. entered a multiyear research collaboration with Merck & Co. Inc. to discover oral therapeutics to treat Alzheimer's disease.

Sunesis will receive an undisclosed up-front payment, research funding and a series of milestone payments, assuming the successful development and approval of a compound identified through the program. Merck, which will receive an exclusive, worldwide license to any resulting products, would make royalty payments based on net sales.

"Merck is very selective in entering into discovery partnerships," Dan Swisher, Sunesis' chief financial officer and chief business officer, told BioWorld Today. "It takes a long time to start the dance and get to this stage, and we're just excited about going to the next stage where we really put our research teams together."

Specific financial terms were not disclosed, though Swisher labeled the agreement "a richer deal than our other single-target discovery deals." He said the deal signals privately held Sunesis' third major collaboration in nine months. The South San Francisco-based company also has entered discovery collaborations with Biogen Inc. and Johnson & Johnson.

In its collaboration with Whitehouse Station, N.J.-based Merck, Sunesis will contribute an initial series of small-molecule inhibitors and apply its fragment-based drug discovery Tethering technology, a process in which the target selects fragments with binding affinity for a specific region on the target surface, to discover additional series of small molecules. Sunesis said its piece-by-piece discovery process allows it to search a chemical diversity space equivalent to hundreds of millions of compounds.

"The basis of our technology is a method for discovering drugs in fragments and then assembling them into higher-affinity compounds," Steven James, Sunesis' senior vice president of business development, told BioWorld Today.

The initial target in the collaboration, beta-amyloid precursor protein-cleaving enzyme (BACE), mediates the deposition of amyloid plaque in the brain. Buildup of the plaque results in the degenerative symptoms associated with the disease. While James said a number of others are working to develop an Alzheimer's therapeutic through the same mechanism, he said BACE has not yielded to traditional screening methods.

"Merck has a large discovery effort on this target, but it's a protease inhibitor and is difficult for traditional high-throughput screening and other small-molecule discovery approaches," Swisher said. "Merck saw our ability to find novel starting points by picking up these weak-binding fragments through Tethering."

Merck and Sunesis have the option to expand the collaboration to additional therapeutic targets beyond BACE, targets that could someday generate more therapeutic options for a market that continues to grow as the U.S. population ages.

Nearly five years after its founding, Sunesis has reached a point at which it is applying its Tethering technology to a variety of discovery programs. Its latest deal represents the partnering of a program previously identified for such a path. Beyond its other partnered programs, Swisher said Sunesis has pegged two other programs in addition to BACE as available for partnerships - one focused on a diabetes target, PTP-1B, and another focused on HIV integrase - while the company plans to internally develop three other programs focused on immunology and oncology.

"In a sense, we are trying to have half of our effort covered through partners and have half of our effort focused on moving our own programs into the clinic," Swisher said. "We know our technology and approach is very broadly based, so this is an example where an Alzheimer's program would fit very nicely in a company like Merck that has a very strong interest and a very strong therapeutic capability."

James echoed the same sentiments.

"We are careful to work with partners that complement the skill and expertise that we have in a particular therapeutic area," he said.

Last month Sunesis entered a collaboration with Cambridge, Mass.-based Biogen to use its Tethering technology to discover therapeutics for inflammatory and autoimmune diseases. The agreement, which includes four related cytokines and up to two additional targets, provides Biogen development, manufacturing and commercialization rights to resulting compounds. Sunesis could gain between $240 million and $360 million in payments. (See BioWorld Today, Jan. 8, 2003.)

In the spring, Sunesis entered a deal with Johnson & Johnson Pharmaceutical Research & Development, a unit of New Brunswick, N.J.-based J&J, to discover small-molecule enzyme inhibitors for chronic inflammatory and autoimmune diseases, a deal in which Sunesis said it reached its first milestone ahead of schedule. (See BioWorld Today, May 7, 2002.)

Sunesis also has a research collaboration with Parma, Italy-based Chiesi Farmaceutici SpA to develop small molecules that inhibit an undisclosed protein-protein target involved in immunological diseases. (See BioWorld Today, Oct. 11, 2001.)

In part due to its three most recent deals, Swisher said Sunesis has maintained the same $50 million cash position it held a year ago. He said the company burns about $20 million per year.