Washington Editor

Sunesis Pharmaceuticals Inc. will use its Tethering technology to discover therapeutics for inflammatory and autoimmune diseases in a collaboration with Biogen Inc.

Each company will contribute scientists and discovery resources in the early stages of the collaboration, which includes four related cytokines and up to two additional targets.

An exclusive worldwide licensing agreement signed by the companies gives Biogen, of Cambridge, Mass., the right to develop, manufacture and commercialize compounds resulting from the collaboration.

The agreement is the largest corporate collaboration Sunesis, a privately held South San Francisco-based company, has signed in its four-year history, Dan Swisher, the company's chief financial officer and chief business officer, told BioWorld Today.

Even though Swisher wouldn't disclose specific financial arrangements related to the deal, he said Biogen will pay an up-front technology access fee, make quarterly payments and make a minority equity investment and a loan over the first 30 months of the collaboration. Sunesis stands to receive $60 million in pre-commercialization milestones per target, as well as significant royalty payments based on product sales, it said.

"We have a very nice series of milestone payments upon both discovery and development success, so that in total, Sunesis can achieve $60 million per compound per target," Swisher said. "So assuming one compound per target, that's on the order of $240 [million] to $360 million in potential payments."

He added that Biogen already has started making payments, allowing Sunesis to sustain its cash position of $50 million, the same amount it had a year ago.

So what does Sunesis have to offer Biogen?

Tethering technology.

Steve James, Sunesis' senior vice president of business development, explained Tethering to BioWorld Today as a way of identifying fragments of drugs that bind to specific sites on a target surface. "Once you identify numerous fragments, they can be productively combined, linked or grown into high-affinity, lean compounds. This approach allows one to interrogate in a virtual way very large chemical diversity by only making a small number of compounds."

In a prepared statement, Michael Gilman, senior vice president, research at Biogen, said Sunesis' technology, coupled with Biogen's expertise in immunology and medicinal chemistry, provides a way of tackling tough targets for small molecules and potentially delivering significant value to patients.

James added that from the first meeting between the two companies, "it was very evident that Sunesis' drug discovery approach was an excellent fit with Biogen's extensive biological target expertise. And they were drawn to the high quality of Sunesis' science."

While the collaboration is initially for 30 months, James said it does provide expansion and extension opportunities.

Meanwhile, Swisher said Sunesis reached its first milestone ahead of schedule in a Johnson & Johnson Pharmaceutical Research & Development deal to discover small-molecule enzyme inhibitors for the treatment of major chronic conditions such as inflammatory and autoimmune diseases. (See BioWorld Today, May 7, 2002.)

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

Biogen's stock (NASDAQ:BGEN) closed Tuesday at $41.05, down 80 cents.