By Lisa Seachrist

Washington Editor

An alliance begun in April 1998 has borne its first fruit as Acadia Pharmaceuticals Inc. licensed the rights to a number of serotonergic lead compounds discovered in a research collaboration with ArQule Inc.

Under the terms of the licensing agreement, San Diego-based Acadia will have the right to develop and commercialize drugs based on these lead compounds and will pay Woburn, Mass.-based ArQule milestone and royalty payments. The companies aren't disclosing the exact financial terms of the agreement, but both emphasized the original collaboration is ongoing and open-ended.

"It's been a very productive relationship between these two companies," said Leonard Borrman, CEO of privately held Acadia. "We really work well together. With the potential of these two technologies, I honestly think we are only scratching the surface of what is possible."

The original agreement paired ArQule's extensive chemical library and its ability to provide large quantities of single compounds with Acadia's ultra-high-throughput Receptor Selection and Amplification Technology (R-SAT). In addition, Acadia's technology provides a means to compare both the efficacy and potency - or biological function - of screened chemical compounds to known compounds or natural ligands. As a result, Borrman pointed out there is a high correlation between the lead compounds identified through Acadia's screening technology and activity in animal models.

"This is the type of information that will allow companies to identify lead compounds rapidly," Borrman said. "That will become ever more important as new genes continue to be discovered."

In order to maximize its return on the technology, Acadia's wholly owned subsidiary, Acadia PharmacoGenomics Inc., provides functional genomics services to other companies.

The original collaboration calls on Acadia to screen ArQule's library of more than 500,000 compounds against a number of central nervous system gene targets. Acadia described one multiplexed screen where the company tested 200,000 compounds to see if they would activate any of six G protein-coupled receptors (GPCRs) using R-SAT. That screen identified 1,000 active compounds, several hundred of which were confirmed to be active at individual serotonergic receptor subtypes. In addition, the company identified a number of novel structure-activity relationships.

Serotonin is a neurochemical messenger in the brain. The receptors responding to this messenger are of the GPCR class, and have been the target of the majority of drugs currently on the market. Acadia will develop the licensed compounds for use in a variety of central nervous system and neuropsychiatric conditions.

"This provides us some truly interesting chemistry on which to expand our in-house portfolio of drug discovery programs," Borrman said. "These compounds really augment what we've done internally."

Neither company appears interested in altering the ongoing collaboration. Stephen Hill, president and CEO of ArQule, said the collaboration draws on the companies' strengths.

"Acadia's been a very good partner," Hill said. "We really bring complementary skills to the endeavor. We've been able to bring diverse combinatorial chemistry and they bring a broad range of targets."

In addition, Hill said Acadia's high-throughput technology permitted an efficient screen of several targets in a single pass in contrast to most screens where a large number of compounds are screened against a single target.

ArQule's stock (NASDAQ:ARQL) closed Thursday at $8, up 25 cents.

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