By Karen Pihl-Carey

Genome Therapeutics Corp. entered into its second human genomics alliance, this time with Wyeth-Ayerst Laboratories to develop therapeutics to prevent and treat osteoporosis.

The collaboration could be worth $118 million for Genome Therapeutics, of Waltham, Mass., if the research program continues for its full term and all milestones are met. The company also will receive royalties based on marketed products that come out of the collaboration.

The $118 million payments consist of an undisclosed up-front license fee, funding for a multi-year research program, as well as milestone payments. The company's stock (NASDAQ:GENE) rose 50 percent on Wednesday on news of the alliance to close at $13.50, up $4.50.

"This is certainly our largest aggregate commercial biotech deal to date," said Robert J. Hennessey, chairman and CEO of Genome Therapeutics. "It's our second major human genetics drug discovery deal based on genomics, obviously focused on osteoporosis on drugs that arrest and reverse the osteoporosis process."

Genome Therapeutics will use its abilities in positional cloning, bioinformatics and functional genomics with Wyeth-Ayerst's drug discovery and osteoporosis expertise to develop new drugs. Robert Recker, director of the Creighton University Osteoporosis Research Center, which is collaborating with Genome Therapeutics, said there is an urgent need for drugs that can add significant bone mass, reversing the process of osteoporosis and preventing fractures.

"We believe it's going to be a very, very exciting scientific project with very high commercial potential," Hennessey told BioWorld Today.

Wyeth-Ayerst, of Radnor, Pa., a division of Madison, N.J.-based American Home Products Corp., said the osteoporosis program with Genome Therapeutics will provide the company with a competitive advantage in developing new therapeutics for the disease.

Osteoporosis affects more than 28 million Americans and nearly half of all women over age 75. It is a systemic skeletal disease characterized by low bone mass and increased risk of fracture. Genetic studies indicate that osteoporosis is a complex, polygenic disorder.

Genome Therapeutics also has a genomics alliance with Schering-Plough Corp., of Madison, N.J., in the field of asthma. The research program was first announced in December 1996 and has a potential value of $67 million, excluding royalties.

On Monday, Genome Therapeutics announced it had reached a milestone in the alliance with Schering-Plough. In response, the company's stock shot up 67 percent to close at $10, up $4.

"Scientifically, I thought we were more competitive in the genomics sector and more capable, more versatile in terms of our scientific skills than generally we've been known for in the outside community," Hennessey said. "The consistent delivery of demonstrable events based on the science is starting to gain wider recognition."

Genome Therapeutics began collaborating with Creighton University School of Medicine in Omaha, Neb., in April 1997 to identify and characterize genes that may facilitate development of new therapeutic approaches for osteoporosis. In December 1998 at the American Society of Bone and Mineral Research conference in San Francisco, Creighton University researchers reported the identification of a gene associated with high bone mass, the mirror image of osteoporosis. They found that family members affected by the gene exhibit increased bone density in the hip and spine, suggesting the gene is in a pathway that senses mechanical loading and creates stronger bones.