By Karen Pihl-Carey

Tularik Inc. entered into its third collaboration with Japan Tobacco Inc., this time for the discovery, development and commercialization of products to treat metabolic diseases.

The agreement means a $25 million up-front payment for Tularik, and more than $50 million in research funding and other payments over the next five years, for a total of $75 million.

"The partnership assigns economic value - it puts value to a Tularik brand name," said Andrew Perlman, executive vice president of South San Francisco-based Tularik. "We're very happy with the economic terms, as well as working further with Japan Tobacco."

Tularik plans to form a wholly owned subsidiary called Tularik Pharmaceutical Co. in South San Francisco to conduct the research portion of the collaboration. The subsidiary will use Tularik's gene regulation approach to discover drugs to treat metabolic diseases. Tularik and Japan Tobacco, of Tokyo, will share equally profits of any commercialized compound identified by the subsidiary during the collaboration. Under certain circumstances and at certain times, Japan Tobacco will have the option to purchase the subsidiary.

"The deal is a very, very nice deal," Perlman told BioWorld Today. "Japan Tobacco has been a partner of ours before. What this allows us to do is to really leverage our drug discovery engine in this new area. They are providing funding, and we're providing the technical know-how to get this up and running. It involves brand new targets."

Tularik and Japan Tobacco entered into their first agreement in September 1996 to discover, research and develop drugs that act through the regulation of leptin gene expression. Leptin is the hormone produced by the obesity gene and a target of many researchers seeking to discover applications for obesity and Type II diabetes. (See BioWorld Today, Sept. 23, 1996, p. 1.)

The second agreement between the companies occurred in September 1998 to develop orphan nuclear receptors, a family of transcription factors that play roles in almost all aspects of development and adult physiology. Tularik is using a proprietary screen to identify stimulators and inhibitors of these receptors.

Both collaborations are ongoing.

"We're very, very happy with the progress of these collaborations and with the participation of Japan Tobacco," Perlman said. "I think the functioning and the success of those collaborations have led to this new agreement."

The most recent agreement, focused on products to treat metabolic diseases, is the most extensive of the three, Tularik said. Once past the research stage, Tularik and Japan Tobacco will share equally any development and commercialization expenses incurred by the subsidiary. The subsidiary will be independent from any research programs currently existing at either company.

Aside from Japan Tobacco, Tularik also has collaborative programs with Knoll Pharmaceutical Co., of Mount Olive, N.J.; Roche Bioscience, of Palo Alto, Calif.; and Taisho Pharmaceutical Co. Ltd., of Tokyo.

Tularik has two cancer drug candidates in clinical trials, and one about to enter clinical trials. T67 is in advanced Phase I studies. The company hopes to choose a Phase II dose soon and move the product into a Phase II trial in the third quarter, Perlman said. T607 started Phase I testing in February, and the company expects to move it into a Phase II early in 2001. And T64, formerly called lometrexol, will enter a Phase II clinical trial in several different cancers in the middle of this year, Perlman said.

Earlier this year, Tularik raised about $71.3 million in net proceeds through the sale of 2.16 million shares, including an overallotment option, at $35.125 per share. Shareholders also sold 718,750 shares in the public offering. (See BioWorld Today, Feb. 25, 2000, p. 1.)

The company also raised about $112 million when it went public in December.

Tularik's stock (NASDAQ:TLRK) gained 37.5 cents Wednesday to close at $21.062.