By Kim Coghill
Washington Editor
DeCode genetics Inc. and Roche Holding AG signed a letter of intent to develop DNA-based diagnostic systems and products.
The agreement comes on the heels of a February announcement in which the companies said their 1998 gene and drug discovery collaboration resulted in an uncovered link between schizophrenia and peripheral arterial occlusive disease. (See BioWorld Today, Feb. 15, 2001.)
DeCode's stock (NASDAQ:DCGN) Tuesday closed at $9.625, up $1.50 or 18.5 percent.
The five-year collaboration likely could be worth in excess of $50 million in research and development funding and milestone payments, according to research notes prepared by Duncan Moore, an analyst with Morgan Stanley/Dean Witter in Iceland. He said the first products resulting from the collaboration are expected to be on the market in 2003.
"More importantly, we estimate that deCode is set to receive double-digit royalties on the sale of any products developed as a result of this collaboration," Moore said.
No one from deCode was available for comment Tuesday. A prepared statement by deCode, based in Reykjavik, Iceland, said under the agreement the companies will use deCode's genomics research and informatics resources to develop an integrated suite of new diagnostic products and services for diagnosing common diseases and predicting individual predisposition in order to create more effective treatment and prevention regimens.
The partners also intend to develop point-of-care informatics products and services that will assist doctors and their patients in evaluating DNA-based diagnostic test results, with the aim of supporting medical decision making and optimizing the possibilities for the early treatment and prevention of disease.
In a prepared statement, Kari Stefansson, deCode's CEO, said, "It is very exciting to be able to bring together our gene research and bioinformatics know-how for the development of the next generation in diagnostic tools and decision-support systems. We will also be working with a trusted partner and the world leader in the field of diagnostics."
The agreement complements the five-year, 1998 gene discovery collaboration by targeting new diseases and bringing deCode's research and expertise to the process of product development.
Discovering the link between schizophrenia and peripheral arterial occlusive disease triggered milestone payments for deCode. The 1998 deal has been valued at $200 million, including an equity investment in deCode by Roche, research funding and milestone payments for the Icelandic company. (See BioWorld Today, Feb. 3, 1998.)
Roche, based in Basel, Switzerland, has rights in that earlier collaboration for the development of any small-molecule drugs against gene targets, drugs derived from gene products and diagnostics, and deCode retained rights to gene and antisense therapies.
Founded in 1996, deCode genetics conducts research into the inherited causes of common diseases. Through its population-based approach and three main business units providing disease-gene and drug target identification, database services and informatics tools, deCode strives to turn raw genomics data into products and services for the health care industry. n