Washington Editor

Phylos Inc. and Avalon Pharmaceuticals Inc. entered a deal to identify drug-protein targets using Phylos' PROfusion technology.

It is a unique deal for Phylos in that, following the collaboration, Avalon will have the option to license PROfusion for target identification and lead optimization.

Albert Collinson, Phylos' senior vice president of business development, characterized the agreement as long term, saying Phylos initially will be responsible for the work, "but the goal or opportunity is to transfer the technology to Avalon."

So Avalon, of Gaithersburg, Md., will have a limited nonexclusive license to use PROfusion, a system designed to select proteins and peptides with desired properties.

Neither company would discuss the specific financial terms of the agreement. Phylos, however, released a prepared statement saying it will receive research funding and, if applicable, milestone payments during the term of the initial agreement. In addition, Phylos would receive annual technology licensing fees if Avalon exercises the right to license.

Any drug-protein interaction assays resulting from the deal will be incorporated into Avalon's genomics technology platform for screening large libraries of small-molecule chemicals to determine their effect on multiple markers for drug activity.

"Avalon, as a company, has a very exciting system for developing novel chemical reagents. What they don't always know is what those agents bind to, in terms of interesting targets," Collinson told BioWorld Today. "This is really a combination of Avalon's expertise in small-molecule chemistry and Phylos' ability to display proteins that really makes this a perfect match."

Collinson said the technology will allow Avalon to cross many disease sectors, but Kenneth Carter, Avalon's CEO, told BioWorld Today that the company focuses primarily on treatments for cancer.

Founded a little over two years ago, Avalon, a genomics-based company focused on the discovery of small-molecule drugs, raised $70 million in December in a Series B round of private equity financing. (The company started out in January 2000 following a $10 million Series A round.)

Carter said the agreement with Phylos "gives us another piece of the platform that will allow us to very quickly go from early stage discovery of different drug compounds or potential drug compounds, to something that has much more specific information with regard to how it is interacting with the cell. Therefore, it will take us much closer to preclinical work-up for individual compounds."

Avalon, which employs 55 people, also has collaborations with Compugen Inc., the U.S. arm of Tel Aviv, Israel-based Compugen Ltd., and with Cambridge, Mass.-based ImmunoGen Inc. (See BioWorld Today, April 4, 2001, and Jan. 26, 2001.)

Meanwhile, Phylos, founded in 1997 on the PROfusion technology licensed exclusively from the Massachusetts General Hospital, has generated in excess of $52 million from research collaborations and equity investments since its inception. The PROfusion technology is used in-house to develop libraries of proteins for the Binding Protein Program, the Tissue Proteome Program and the Therapeutics Program.

Phylos, a private company, has collaborated with Amgen Inc., of Thousand Oaks, Calif.; Hoechst Research & Technology GmbH (now Aventis); and Cubist Pharmaceuticals, of Lexington, Mass. Phylos also has a facility in Frankfurt, Germany.

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