Washington Editor

Albany Molecular Research Inc. agreed to conduct medicinal chemistry research and lead optimization for Merck & Co. Inc. in a three-year fee-for-service contract.

In the first phase of the deal, the companies will work jointly to identify and develop small-molecule drug candidates for a proprietary Merck target.

David Waldek, chief financial officer for Albany, N.Y.-based Albany Molecular Research (AMRI), told BioWorld Today that the companies would not discuss specific disease targets.

However, he said, "To us, this contract further demonstrates the strength of our business and the value that we can add to our partners. We've been providing this type of work for the top-level biotech companies for quite awhile - our company is 10 years old."

In a prepared statement, Malcolm MacCoss, vice president of basic research/basic chemistry for Merck Research Laboratories, said, "Merck is pleased to work with AMRI to supplement our extensive ongoing efforts to identify promising new drug candidates. AMRI has distinguished itself as a valuable resource for chemistry problem-solving and integrated drug discovery technologies, and we look forward to this collaboration."

While Waldek could not release details about the financial arrangement, he said the contract involves both the fee-for-service component and provisions for milestone payments for compounds that achieve clinical and regulatory benchmarks. Success fees would be paid on compounds for which AMRI scientists are designated as inventors and could be in the multimillion-dollar range per compound.

Other parts of the fee will be based on the number of research scientists AMRI has working on Merck-specified projects.

Some of the work performed by AMRI may include compound design and synthesis, using both traditional and modern parallel synthesis technologies, computer-assisted chemical design and modern analytical and purification technologies.

Friday's news marked the second time in a week that AMRI announced a deal with a major company. The earlier announcement surrounded a drug discovery collaboration with Cambridge, Mass.-based Genzyme Corp. whereby AMRI will provide libraries of natural product extracts to Genzyme for biological screening against a number of therapeutic targets.

"We own the compounds that are in the libraries, so if they find anything that's a hit, they will have to come back to us and we'll discuss the milestone and royalties for them to have further access," Waldek said. That agreement included some up-front mutual cost-sharing, he said.

AMRI's stock (NASDAQ:AMRI) closed Friday at $21, up $1.15.