Sagres Discovery Inc. is stepping into the somewhat public world of drug discovery, entering into a research collaboration with Boehringer Ingelheim International GmbH to identify oncology drug targets.

"This is our coming out, if you will," Sagres CEO and co-founder David Ferrick told BioWorld Today. "We have intentionally run somewhat quietly until we could generate this type of agreement in which we could leverage our technology very quickly into development."

Davis, Calif.-based Sagres will apply mouse tumor biology and in vivo screening technology coupled with bioinformatics to identify targets. The privately held company's technology platform, from which it has developed a set of oncology targets called Oncogenome, combines the biology of cancer formation in mouse models with high-throughput genomics technologies to discover and validate human cancer genes.

Boehringer receives exclusive rights to certain targets, from which the Ingelheim, Germany-based firm expects to develop and market monoclonal antibody and small-molecule products worldwide, primarily in the oncology area.

Sagres, which will retain rights to certain targets, will receive an up-front payment, committed research funding, milestone payments and royalty payments on any resulting sales. Boehringer is responsible for developing, manufacturing and marketing products.

More specific financial terms were not disclosed, though Ferrick labeled the deal as fairly balanced. He said the agreement included a significant up-front component, a light middle element and the potential for a significant payday given downstream success.

The early funding from Boehringer, added to Sagres' $20 million second round of financing completed in October 2001, will be applied toward the company's internal growth.

"This deal clearly impacts our burn and allows us to very aggressively go after our internal programs," Ferrick said. "The partnering plan gives us resources to generate revenue and proves that we have a platform that can sustain the business. And it gets our targets into development as fast as we can."

The company, whose initial financing round raised $1.6 million, was founded in June 2000. But Sagres now finds itself transitioning from a platform company into a discovery mode.

Ferrick pointed to an initial focus on therapeutic antibodies. But, he added, the company's surface proteins amenable to therapeutic antibody development represent only about 15 percent of its Oncogenome discovery efforts to date.

"We managed to partner in such a way that not only are we providing significant antibody targets for our partner, but also for our own purposes," Ferrick said. "For our own internal programs - those that we are working on - we are free to continue to partner with others."

Sagres also maintains the flexibility to further develop its intracellular targets internally or through other partnerships. Ferrick said the company would maintain rights to such small-molecule targets until a point further downstream, though.

Three months ago Sagres began working on another front to further its discovery efforts. It entered a multiyear subscription agreement with Rockville, Md.-based Celera Genomics Group, providing Sagres access to the Celera Discovery System for its database products, bioinformatics systems and other discovery tools. The Celera Discovery System is an integrated, web-based platform that enables users to leverage Celera's computational tools and genomics and biological data to advance the discovery process.

Sagres' technology was developed by David Morris, while other company founders include Matthias Wabl and Mike Miille, now its chief operating officer. Its Oncogenome project is winding down, with future plans to work on the project in partnership with academic institutions, and the 37-person company's shift in focus is becoming apparent. While Sagres could grow to about 50 employees in the next year, Ferrick said many current and new positions would transition to the discovery process.

"One of the hardest things at the start was with all the differential stuff going around and all the disappointments of the first wave of genomics, it was somewhat of a challenge to get people to understand the biological relevance of what we were doing in a very high-throughput genomic way," Ferrick said. "Because of what we were trying to accomplish with the Oncogenome, we felt potentially that there would be a lot of interest, which has started to surface."

Sagres hopes to attract more interest, with plans to raise up to an additional $35 million in a Series C round of financing expected to close in June. Most of any added money would be directed toward further internal discovery efforts. The coming year's plans also include additional deals, with a more narrowed focus in targets developed a bit further than this initial deal.

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