By Brady Huggett

With a pocketful of technology licensing deals, NeoGenesis Drug Discovery Inc. was looking for the next step in its development: drugs of its own. The company will get that chance through its agreement with Tularik Inc., disclosed Wednesday.

Tularik, of South San Francisco, will provide disease targets to NeoGenesis, of Cambridge, Mass. NeoGenesis will apply its drug discovery technologies ¿ its automated ligand identification system (ALIS) and its NeoMorph library of more than 10 million drug-like compounds ¿ to screen for small-molecule drug candidates off those targets. Tularik is providing research funding to NeoGenesis, and NeoGenesis may receive milestones and royalty payments on products developed by Tularik.

Those financials indicate a deal similar to others NeoGenesis has struck, including ones with Biogen Inc., of Cambridge, Mass.; Celltech Group plc, of Slough, UK; and Mitsubishi-Tokyo Pharmaceuticals Inc., of Tokyo. But the disparity here is this: For select targets supplied by Tularik, the companies will share equally in the development, marketing and profits of any derived drugs. (See BioWorld Today, July 10, 2001; July 13, 2001; and Aug. 16, 2001.)

¿NeoGenesis wants to come up with its own drugs,¿ said Satish Jindal, president and chief scientific officer at NeoGenesis. ¿To do this, we have to come up with some unique partnerships. We are choosing companies with special insight and strong expertise in experimental biology and preclinical and clinical development. This gives NeoGenesis an opportunity to have a major ownership in drugs through these partnerships. This deal with Tularik is one of these types of deals that we will be doing in the future.¿

Tularik has a habit of keeping its ear to biotechnology¿s ground.

¿We¿re always looking at companies that have novel technologies,¿ said Terry Rosen, executive vice president of operations for Tularik. ¿I think we have looked at numerous things early in their genesis, things that span the whole drug discovery process. In this case, we think some of our targets would benefit from applying the NeoGenesis technology.¿

Initially, Tularik will provide a sum of targets ¿ some of which they will pay NeoGenesis to do the screening for, some of which will be jointly owned. Next year, the deal will be expanded, with Tularik providing up to ¿two dozen¿ or so targets, Jindal told BioWorld Today.

¿In our earlier deals, the partner paid us all the money, all the research and development,¿ said Jindal, adding that here NeoGenesis will assume some of the financial responsibility for the shared targets.

The companies aren¿t disclosing areas in which the targets are involved, but Jindal described them as ¿high-value targets involved in predominant diseases.¿

Rosen explained how targets were chosen for the collaboration.

¿They weren¿t selected on the therapeutic areas,¿ he told BioWorld Today. ¿They tended to be selected on the types of molecular target that we felt would benefit from this approach.¿

Tularik has four drugs in clinical development and works in seven therapeutic areas: cancer, viral diseases, inflammation, immune disorders, lipid disorders, diabetes and obesity.

¿Tularik has a strong biological expertise, and that was clearly a differentiating factor in our decision,¿ Jindal said. ¿We will be making a few of these types of deals, but the company has to have strong experimental biology and the funds to take it through development, which [Tularik] has.¿

NeoGenesis has seen the validation of its technology through licensing deals as well as the generation of revenue. It now moves ahead with the potential of owning, at least partially, the drugs it will help discover.

¿Both will go hand in hand,¿ Jindal said. ¿We have this strong platform, and we can apply it in multiple ways. The key message is that NeoGenesis will have a strong royalty stream through diverse creative partnerships.¿

Tularik¿s stock (NASDAQ:TLRK) rose 68 cents Wednesday, closing at $17.43.