By Mary Welch

Aurora Biosciences Corp. will receive about $46.9 million from the Cystic Fibrosis Foundation to identify and develop new cystic fibrosis drug candidates in what is being called the largest contract ever awarded by a voluntary health organization for drug discovery.

Under the five-year agreement, San Diego-based Aurora will identify and develop two to three new cystic fibrosis (CF) candidates that will be ready for the preclinical and clinical research stages. The Bethesda, Md.-based foundation will fund the Aurora-CFF initiative (also known as the CF Foundation/Aurora project) through technology access fees totaling $30 million for non-exclusive access to Aurora's assay, screening and chemistry technologies and for ongoing scientific support. With completion of specific clinical milestones, additional payments would be made, representing a potential investment by the foundation of $46.9 million.

The $30 million payment was calculated on the basis of funding 50 man-years of work, research support and research milestones. The additional $16.9 million will be paid to Aurora if two to three compounds receive "initial approval" by the FDA.

"It's a real deal with real money assigned to it," said Kevin Tang, senior biotech analyst with Deutsche Banc Alex. Brown in New York. "One of the impressive things about Aurora is that they're very good business people, and this is a great deal for both sides. For the Cystic Fibrosis Foundation, it fills a niche that big pharmaceutical companies aren't focussed on. For Aurora, it gives them significant funding with the $30 million virtually guaranteed and then another $17 million or so in milestones. It's a great collaboration."

Aurora's stock (NASDAQ:ABSC) closed Wednesday at $47.437, up $8.187, or 21 percent..

The agreement calls for Aurora to develop assays for up to six targets, perform up to four screens and eventually identify and develop up to two to three new CF drug development candidates suitable for preclinical research.

In addition, the two parties have a co-commercialization agreement that includes revenue sharing on any marketed products.

"This is a very significant deal," said Doug Farrell, Aurora's senior director, investor relations and corporate communications. "Not just in terms of the financial commitment, but it also goes beyond screening into optimization. As a result, we'll be able to capture more value further downstream."

The collaboration will use Aurora's assay development and screening services, its chemical library of about 400,000 compounds, as well as its secondary screening and lead-optimization capabilities. To assist in the process, an assay for, and screening of, the cystic fibrosis transmembrane conductance regulator (CFTR) - a protein that is defective in CF patients - will be developed.

Aurora will provide an integrated and multifaceted approach to the discovery of new therapeutics for CF. Among the technologies that will be used are Aurora's Voltage Sensor Probe technologies for assay development, UHTSS and VIPR technology for screening, metabolite technology for secondary screening and GeneBLAzer and GenomeScreen technology for target identification and validation.

The project will be the first wide-scale attempt to discover a treatment specifically for CF, a genetic disease that interferes with breathing and leads to lung inflammation and infections that eventually are fatal, the foundation said.

The attempt to discover a CF-specific treatment was greatly enhanced by the discovery in 1989 of the CF gene.

A major effort of the project will be the search for a strategy to correct a defective protein in the cells lining the airways of people with CF. The defective protein interferes with the proper movement of chloride and sodium across the cells of the airways, producing a sticky mucus buildup in the lungs. Another treatment strategy will focus on finding novel agents to stop chronic bacterial infections in the lungs, which is the primary cause of death for those with CF.

The collaboration wants to reduce the CF drug development time frame to about seven years.

Aurora's scientists will screen the chemical compounds to see if any correct or modify defective CF cellular targets. "We want to whittle down these compounds to about two to three and take them to the stage where the foundation will file an IND [investigational new drug application]," Farrell said. "The foundation has an excellent network of clinical investigators in place who will take the compounds through clinical trials. They have a well-oiled machine. When any products are ready for market, we almost certainly will pick up a company interested in handling the sales and marketing aspects. We don't want to do that. It'll be no challenge finding a company anxious to enter into a licensing agreement."

In fact, the CF Foundation's Therapeutics Development Network has experience taking drugs into Phase I trials and beyond. This specialized clinical trials network was established in 1998 to expedite Phase I and Phase II evaluation of new products. The foundation's nationwide network of 114 accredited care centers will be among those sites selected for Phase III trials resulting from the Aurora partnership.

Currently there are about 20 new CF drugs in the development pipeline. Of those, 15 are in clinical trials and are being evaluated either through the Therapeutics Development Network or through other CF care centers across the U.S.

This is the second collaboration between the two entities. In September 1999, the foundation paid Aurora to support the identification of chemical compounds active against up to two cellular targets.

Funds for the collaboration are being raised by the CF Foundation's major gift campaign, Building Bridges to a Cure, which last year received a $20 million gift from the Bill and Melinda Gates Foundation.

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