By Randall Osborne

West Coast Editor

SAN FRANCISCO - Harsh market weather lately for biotechnology is leading to investor scrutiny of genomics companies, and that means fewer can stand tall.

As rainy wind whistled around the 25th-floor tower of the Westin St. Francis hotel here, Geoffrey Ginsburg explained how Millennium Pharmaceuticals Inc. is riding out the storm. It's not about more data, or more analytical tools, he said. It's about making drugs from the genome.

Millennium, of Cambridge, Mass., disclosed Wednesday that its five-year partnership with Bayer AG, begun in 1998, has yielded a small-molecule drug candidate - the first to be discovered against a genomics-derived target, said Ginsburg, senior program director of the company's target discovery program.

"We spent a lot of time thinking about whether we could make that claim," Ginsburg said. "Others have developed an antibody or biotherapeutic molecules [through the genomics approach] that have gone into clinical studies, but to move through a chemistry organization, and develop lead compounds that have in vivo and in vitro efficacy, as well as appropriate toxicity requirements - I don't think anyone's done that before."

The molecule, he said, "inhibits an enzyme, and others like it have been shown to slow cellular growth and proliferation. We don't believe the mechanism is tumor specific," although further details are not being disclosed.

Ginsburg said Phase I trials are expected to begin this year. "There are not any scientific hurdles left," he said. "It's just a matter of logistics."

Millennium discussed the news and other developments at a presentation during the J.P. Morgan H&Q Healthcare Conference.

Bayer, of Leverkusen, Germany, and Millennium entered the five-year, potential $465 million deal in 1998. Under the terms, Millennium will provide Bayer with 225 drug targets relevant to cardiovascular disease, cancer, osteoporosis, pain, liver fibrosis, hematology and viral infections. Last October, Millennium said 70 had been delivered. (See BioWorld Today, Sept. 24, 1998, and Oct. 25, 2000.)

The new compound, although important, is less significant than Millennium's unique strategy, which is due to yield more of the same, Ginsburg said.

"To us, that's the biggest message," he said.

Kevin Starr, Millennium's chief financial officer, said, "With all the databases, all the chip technologies and proteomics, miniaturization and imaging, we can't be the best in all those things, but there are hundreds of millions of dollars, or billions of dollars, out funding those. We can get access by licensing it, and be the best systems integrator in the world."

Earlier this week, Millennium and Rodman, Pa.-based Wyeth-Ayerst Research, a division of American Home Products Corp., said they have identified a preclinical candidate compound that demonstrated safety and efficacy in animal models of life-threatening bacterial infections, and are working toward further validation.

Starr said Millennium has delivered 12 targets to Wyeth-Ayerst, and the companies have a separate partnership in central nervous system disorders.

Michael Pavia, chief technology officer for Millennium, said deploying varied methods will help develop drugs much faster, too.

"The trial process is very inefficient," he said. Simply moving from a paper-based process to an electronic one will mean much, Pavia said. Informatics will allow for quantum leaps in time saving, as in the automobile industry, he said.

"They don't crash a thousand cars into the wall anymore - they run simulations and crash two cars," Pavia told BioWorld Today. "Then, we can use pharmacogenomics to pick the right patients to put in trials. When you start to put these things together, you're talking about whacking off years, and hundreds of millions of dollars, from the clinical trial process."

Dennis Purcell, senior managing partner at Perseus-Soros Management LLC, of New York, said Millennium's applied-genomics strategy will continue to pay off.

"In 2001, there are companies that have started to compete with mid-size pharmaceutical companies, and Millennium is certainly one of them," Purcell told BioWorld Today. "It's not just the 'Amgens' anymore," he added, referring to Thousand Oaks, Calif.-based Amgen Inc.

Millennium's stock (NASDAQ: MLNM) closed Wednesday at $47.875, up $3.625.