By Randall Osborne

West Coast Editor

Karo Bio USA, the U.S. subsidiary of the Swedish genomics firm Karo Bio AB, entered a deal worth up to $32 million with Aventis Pharma AG.

Under the terms of the one-year deal, Aventis gets access to Karo Bio's BioKey assay technology for targets that have been identified by Aventis' genomics efforts. Aventis, the prescription drug arm of Strasbourg, France-based Aventis S.A., has an option to extend the arrangement for three more years.

Aventis, which said it expects the agreement to boost its anti-infectives program, is Karo Bio's eighth licensee for BioKey, which allows for quick identification of small-molecule leads. Other licensees include Bayer AG, of Leverkusen, Germany, and Millennium Pharmaceuticals Inc., of Cambridge, Mass.

The potential $32 million assumes the development and approval of two compounds.

"At this point, it's just two products - whatever comes out of the agreement," said Tanya Bush, director of business development for Durham, N.C.-based Karo Bio USA. The amount also includes research funding, license fees, technology milestones and clinical milestones, but excludes royalty payments.

Nothing further will be disclosed, Bush said.

Karo Bio USA was created through a non-cash merger completed in May by Karo Bio AB, of Huddinge, Sweden, with Novalon Pharmaceutical Corp., of Durham, N.C., valued at about $107 million. Novalon had been developing drugs that work upon nuclear receptors - cell nucleus proteins that act as receivers for key hormones - and Karo was involved in similar research. (See BioWorld Today, March 28, 2000.)

Novalon, founded in 1996, developed technology based on the use of peptides of what it calls BioKeys - small proteins that can bind biologically active areas on proteins, such as nuclear receptors, that are targets for drug development. The company also devised a method known as molecular braille, which lets researchers link the action of a substance on a nuclear receptor to tissue-selective biological activities.

With four programs in nuclear receptors, Karo Bio USA's strategic allies include Merck & Co., of Whitehouse Station, N.J., for disorders affected by estrogen receptors; Bristol-Myers Squibb Co., of New York, for metabolic disorders; and Abbott Laboratories, of Abbott Park, Ill., for Type II diabetes.

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