BORNHEIM, Germany - The German company Epigenomics AG plans to merge with the U.S.-based company ORCA Biosciences Inc., a deal that the boards of both companies approved and is expected to be finalized early in 2001.

Financial details were not disclosed.

Epigenomics, of Berlin, specializes in finding new drug targets and diagnostics by screening those genes that are aberrantly methylated in tissue. The company has proprietary technologies to detect genes' methylation status, which shows whether they are switched on or off. ORCA, of Seattle, focuses on discovering which sequences are possible target genes, sensitive detection methods and early stage therapeutic applications in cancer.

The merger adds complementary skills to each company, said Oliver Schacht, chief financial officer at Epigenomics.

"Here in Berlin we have more expertise in high-throughput screening of tissues for methylated genes," he told BioWorld International. "Our Seattle colleagues' focus is more in target identification. They also bring in more biological know-how for validating targets and have more than 200 interesting sequences in their pipeline."

ORCA collaborates with institutions and centers in the U.S. such as the Fred Hutchinson Cancer Research Center, USC/Norris Comprehensive Cancer Center, Johns Hopkins University and the University of Missouri School of Medicine.

"For our work this means very good access to patient groups, sample collections and the data of long-term clinical studies," Schacht said. With sensitive detection technology in the Seattle labs, Epigenomics can now initiate development of DNA methylation-based early stage cancer screenings, he added.

"As the only other company in the world with a focus on DNA methylation, this transaction with ORCA will lead to the creation of a pre-eminent force in this very exciting market for years to come," Epigenomics CEO Alexander Olek said in a prepared statement.

Upon completion of the merger, ORCA Biosciences will become Epigenomics Inc., a wholly owned subsidiary of Epigenomics. Gary Schweikhardt will lead Epigenomics Inc. in Seattle as CEO and Robert W. Day will take the role of chief medical officer, both reporting to Alexander Olek, president and CEO of Epigenomics AG. Epigenomics' headquarters will remain in Berlin.

Epigenomics in November completed a EUR28.3 million (US$25.3 million) second financing round.