By Randall Osborne

West Coast Editor

For the second time in less than a month, phage display technology is the focus of a deal made by Human Genome Sciences Inc. (HGS) - this one a $16 million agreement with Dyax Corp.

"Basically, this gives us a capacity to do peptide drugs," said William Haseltine, chairman and CEO of HGS, who said they make "an exciting new class of drugs, made doubly so by new delivery technologies."

Phage display lets a company screen hundreds of millions of compounds over short periods of time, and make thousands of antibodies.

The agreement gives HGS rights to use the phage-display technology to develop as many products as it wants, which it may then sell or outlicense. HGS will pay Dyax $16 million over the next several years for licenses and research support, along with milestone and royalty payments on products, as well as revenues from licensees.

"We made a decision five years ago that the most important genes for medicine would be secretory proteins," Haseltine told BioWorld Today, and the deal with Dyax is a natural extension of that.

Secretory proteins may comprise the great majority of peptide hormones, receptors, ion channels and transporters, he said, and some are useful as drugs themselves. Others are targets for more than half of the current small molecule drugs and, HGS believes, for the majority of potential human antibody targets.

"This is the majority of what we do," Haseltine said. "It's about 70 percent of our expenses. We've cloned, sequenced and expressed for more than 12,000 novel human secretory proteins, and all are available as clones that can be expressed in E. coli or mammalian cells. For these proteins, on average, we have their effects on at least 150 different types of cell."

HGS has "a very strong framework, for finding proteins that are drugs, and proteins that are antibody targets, and now proteins that are peptide drug targets."

Under the terms of the pact, HGS also may have Dyax perform research in the fields of protein separation and high-throughput screening technology.

Haseltine spoke of the agreement with Cambridge, Mass.-based Dyax in conjunction with a deal earlier this month with Cambridge Antibody Technology, which also focuses on phage display technology and also is for 10 years. (See BioWorld Today, March 2, 2000, p. 1.)

"When we considered these transactions, we considered whether we should buy the companies, but we've essentially purchased a full range of their current and future capacities," Haseltine said. "We've bought the research teams for the first three years - the FTEs (full-time equivalent staffers) at CAT and Dyax. So we've actually purchased the rights to use their expertise. This gives us a running start."

The price was just right, Haseltine added.

"Our royalty rates to technology partners are low enough to permit us to practice these technologies at almost the same cost that the technology suppliers themselves would have," he said. "It's only 1 percent or 2 percent above what they themselves have to pay."

Dyax was incorporated in 1989 under the name Biotage Inc., and merged with Protein Engineering Corp. in 1995. Last year, to expand its portfolio of phage display technologies, Dyax Corp. acquired Target Quest, a Dutch company that specializes in the application of phage display technology for antibody engineering and cancer therapeutics. (See BioWorld Today, Aug. 5, 1999, p. 1.)

Phages are viruses that infect bacteria. Privately held Dyax engineers them to express small structure peptides, and searches for those that bind most specifically to a targeted molecule.

HGS's stock (NASDAQ:HGSI) closed Tuesday at $92.046, up 35.94 cents.