By Lisa Seachrist

Washington Editor

Chemoinformatics specialist Tripos Inc. signed a deal with bioinformatics specialist Lion Biosciences AG to link their technologies in order to develop a unified platform for drug discovery.

The announcement comes after 18 months of collaborative efforts by the two companies. Lion, of Heidelberg, Germany, will purchase 409,091 shares of 5 percent Series B convertible preferred stock from St. Louis-based Tripos for $22 per share, or $9 million. The shares are convertible in February 2005 on a share-for-share basis into Tripos common stock. Lion will have a stake of nearly 11 percent in Tripos if fully converted, at which time Tripos would have 3.8 million shares outstanding.

"Both companies have been recognizing the need for pharmaceutical companies to have a seamless integrative approach for drug discovery," said Colleen Martin, CFO for Tripos. "We have very complementary technologies. This deal really formalizes what we've been doing over the past year and a half."

The collaboration will create a platform that spans the entire cost- and research-intensive part of drug discovery, from gene to optimized lead. Lion is a specialist in informatics and genomics, or the biology side of the drug discovery. Tripos' strength is creating chemical libraries and managing high-throughput screening in order to develop optimized drug leads.

The companies are looking to build a comprehensive and complete software system integrating the biology side of drug discovery with the chemistry side of the process. The products they will develop will allow companies to develop a global organizational research tool.

The first product the two companies will be developing under the alliance is "GenChem," a software tool for integrating and processing genetic, molecular, cellular, tissue, high-throughput screening and chemical data, on one single information technology platform.

"A lot of what we do will be customer driven," said Martin. "Both of us will be developing products together and individually that we hope will result in products that we can market further down the line. We expect to market our first joint project in the first half of 2000."

Martin said the collaboration was a big step for Tripos on its way back to profitability. The company had some success in providing highly purified and characterized compounds under a partnership agreement in 1996 and 1997. It decided to create its own state-of-the-art laboratory capabilities and incurred costs to complete that project. Tripos has software deals with Pfizer Inc. and the Parke-Davis unit of Warner-Lambert Co.

The company's stock (NASDAQ:TRPS) closed Monday at $20.50, up $1.