Metabolex Inc. entered a multiyear collaboration with Yamanouchi Pharmaceutical Co. Ltd. to develop drugs for diabetes and obesity, with the companies analyzing 100 targets selected from Metabolex’s database.

The deal calls for an undisclosed up-front payment and research funding, as well as screening and development milestones and royalties. Metabolex will retain co-promotion rights in North America and South America.

“This is tremendous validation of our work in genomics and in target discovery,” said Mark Bagnall, chief financial officer of Hayward, Calif.-based Metabolex.

This is not Metabolex’s first alliance in insulin resistance. It entered two programs with Pfizer Inc., of New York, with the original deal, worth up to $50 million, being agreed upon in 1999 and focused on discovering insulin-secretion defect therapeutics. The second, also potentially worth more than $50 million, focused on insulin resistance and was struck in July 2000. The companies restructured their collaborations in July to focus only on secretion, leaving Metabolex to look elsewhere for partners for the insulin-resistance program. (See BioWorld Today, July 3, 2001; May 19, 2000; and Jan. 7, 1999.)

Bagnall characterized the new Yamanouchi deal as being larger than the original Pfizer deal, “both in terms of dollars and head count.”

In addition to replacing the original agreement with Pfizer, the agreement with Yamanouchi adds obesity to the program, and not just insulin-resistance. The program requires for Metabolex to do “everything all the way through target validation,” Bagnall said.

“At that point,” he continued, “Yamanouchi takes over and screens the targets to identify novel compounds for drugs. Our job is really target identification, target validation and assay development.”

Although the companies will look at 100 targets over the life of the program, not all of those targets will be screened, he said.

Metabolex CEO Thomas Glaze made comparisons of this deal at least in the number of targets involved to others done in biotechnology, including an agreement focused on obesity and adult-onset diabetes between Curagen Corp., of New Haven, Conn., and Bayer AG, of Leverkusen, Germany, signed in January 2001. That deal looks at 80 targets, continues over 15 years, and was valued at $1.34 billion at the time of signing. (See BioWorld Today, Sept. 20, 2001, and Jan. 17, 2001.)

“Metabolex has been known as a great diabetes company for years now, and has in the last three to four years really focused on putting together a comprehensive program exploring genes expressed in the tissues related to diabetes, which are muscle and fat,” Bagnall said, noting that these genes also are expressed in pancreatic tissue.

Also, in the past two to three years, Metabolex began developing a pipeline of its own, and currently has an insulin sensitizer in Phase I trials as well as candidates in preclinical studies, he said.

Bagnall said that the deal with Yamanouchi, of Tokyo, will allow Metabolex to focus on its later-stage candidates. The funding involved also will enable Metabolex to hire additional staff.

The company is in the middle of a road show now to raise private equity. Bagnall said the company has about $20 million in cash, which should take it through March 2003.