Pharmacopeia Inc. is starting February with a flurry.

The Princeton, N.J.-based firm that provides services and products for drug discovery entered two new collaborations while reaching a milestone in a separate collaborative drug development effort.

Pharmacopeia and Celgene Corp. will work together to identify small-molecule lead compounds that could be developed to treat inflammation. Specifically, Pharmacopeia's small-molecule discovery technology will be used to identify leads against a target selected by Warren, N.J.-based Celgene.

In return, Pharmacopeia will receive an undisclosed amount of research funding and will be entitled to receive milestone and royalty payments.

"The funding is such that we get paid for the work that we're doing today, and there also are milestones and royalties associated with that agreement," Stephen Spearman, Pharmacopeia's chief operating officer of its drug discovery business unit, told BioWorld Today.

Pharmacopeia also entered a collaboration with Novartis AG, of Basel, Switzerland, in which the companies will work to identify lead compounds against multiple drug targets from Novartis' discovery programs. Specific areas of focus were not disclosed, though more than seven years ago Pharmacopeia began a relationship with Sandoz Ltd., Novartis' predecessor, to generate compounds for cancer, organ transplant rejection, skin disorders and central nervous system diseases.

Novartis will pay for Pharmacopeia's services along the way. More detailed financial terms of the Novartis deal were not divulged - terms of the original deal with Sandoz were not disclosed, either. (See BioWorld Today, Oct. 4, 1995.)

"Under the new deal, there could be milestones and royalties associated with the work we're doing because the two agreements are not totally unrelated," Spearman said. "From the original Sandoz deal, we've received all the fees for the work that we've done up until now, and that deal has milestones and royalties associated with it. The present deal includes fees for the work that we're going to do, but depending on how the work is related back to the original agreement there could be milestones and royalties associated with it."

In an example of where these deals might lead, Pharmacopeia said it reached a research milestone in its partnership with Daiichi Pharmaceutical Co. Ltd., which began preclinical development of a compound identified from the collaboration. Pharmacopeia said the achievement marks the sixth compound to enter preclinical work based on its work with other unnamed partners.

The milestone triggered an undisclosed cash payment from Osaka, Japan-based Daiichi, which is pursuing further development of the unnamed compound. Pharmacopeia is entitled to additional milestone payments as this, or other collaborative programs, progress. Pharmacopeia also is entitled to royalties on sales of any resulting products.

At the time of its initiation six years ago, the deal was valued at $22 million for Pharmacopeia through an equity investment, licensing fees and research funds. Pharmacopeia also may receive milestone payments from Daiichi based on drug development progress and royalties. Pharmacopeia has used its combinatorial chemistry and screening technology to develop drug candidates for several molecular targets, though neither the targets nor the diseases was disclosed. (See BioWorld Today, April 2, 1996.)

Spearman said Pharmacopeia has worked on several programs with Daiichi, though he declined to provide Pharmacopeia's financial take for its efforts.

Pharmacopeia both outlicenses libraries for screening and screens libraries for customers. Research agreements similar to the Daiichi model include deals with N.V. Organon, of Oss, the Netherlands; Schering-Plough Corp., of Kenilworth, N.J.; Bristol-Myers Squibb Co., of New York; and Berlex Laboratories Inc., a subsidiary of Schering AG, of Berlin. Compound identification collaborators include Organon, Schering-Plough, Berlex and Amgen Inc., of Thousand Oaks, Calif.

Pharmacopeia's stock (NASDAQ:PCOP) gained 8 cents Monday to close at $6.63.