By Brady Huggett

Target-heavy Elitra Pharmaceuticals Inc. signed a deal with Merck & Co. Inc. to work toward antibiotic compounds, while it eyes the public markets for signs of life.

Elitra will provide an undisclosed but defined number of antibiotic targets that Merck, of Whitehouse Station, N.J., will screen against its natural product and compound libraries. Merck will own worldwide rights to any resulting products.

Financial details were not disclosed, but Gregory Tibbitts, chief financial officer at Elitra, called the arrangement a ¿good-sized deal¿ and said Elitra was ¿very happy with the economics¿ of it.

What is known is this: Elitra will receive an up-front payment comprised of a licensing fee and an equity investment, gets three years of research funding, and can look ahead to potential milestones and royalties if products are approved.

¿Merck is committed to this field of antibiotics, and we think our targets and assays will be well developed by Merck,¿ Tibbitts said. ¿From our perspective, we have very high-quality genes and we have far more than anyone else that we are aware of. That knowledge of essential genes allows us to pick the best targets for screening.¿

It isn¿t clear which branch of antibiotic medicine the companies initially will work on, but Tibbitts said whatever the area, San Diego-based Elitra can provide the targets. Elitra will use its proprietary bioinformatics technology to select optimized antibiotic targets and will develop cell-based assays for the selected targets to be used in Merck¿s high-throughput screening systems.

Tibbitts said the second part of the agreement works backward ¿ instead of providing a target to be developed into a compound, Elitra will take compounds and strive to determine their previously unknown targets.

¿Pharmaceutical companies have compounds they have developed that they do not know the target to,¿ Tibbitts said. ¿We have a technology that we are using in antifungal discovery that can determine the target of a compound. We are working with Merck to develop this technology so it works with antibacterial compounds.¿

And although Elitra uses this technology for its own antifungal purposes, Tibbitts said the company would ¿be very open¿ to signing deals with others in the fungal area as well.

Elitra viewed itself as fit for public consumption more than a year ago, filing for its initial public offering in September 2000, seeking about $86 million. Since that point, the market has become increasingly dour, and Elitra pulled its IPO in November. (See BioWorld Today, Sept. 6, 2000.)

¿We missed the window,¿ Tibbitts said. ¿But we would very much like to access the public markets.¿ The deal with Merck should help achieve that goal if and when the markets rebound, Tibbitts said, since the agreement is a positive vote for Elitra¿s technology.

¿Merck doesn¿t do many deals with biotech companies, at least discovery deals, so we are very pleased they have selected us to partner with,¿ Tibbitts said.

Harry Hixson is Elitra¿s CEO and chairman. Hixson previously served as president and chief operating officer at Amgen Inc., of Thousand Oaks, Calif., and was there for the product launches of both Epogen and Neupogen, two blockbuster products.

¿Hixson is a believer in retaining marketing rights whenever possible,¿ Tibbitts said. ¿And we want to be a pharmaceutical company ¿ it¿s our goal to sell drugs under the Elitra name. Merck is important to us because they are respected and have chosen to partner with us. They have the worldwide rights to products that come out of this, but we feel we are also able to develop drugs the arise from our technology.¿

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