By Mary Welch

Pfizer Inc. strengthened its position in genomics, and the balance sheets of both Celera Genomics and Incyte Pharmaceuticals Inc., through collaborations the biotech companies each called its biggest to date.

"It's our most extensive deal by far," said J. Craig Venter, Celera's president and chief scientific officer. "This is a five-year genomics agreement that includes a subscription to all of our current database products and a collaborative gene discovery agreement. Usually our five-year deals are in the $25 [million] to $50 million range and this is much bigger. This one has locked-in terms that will bring us substantial revenues through 2005."

In fact, Doug Lind, vice president with New York-based Morgan Stanley Dean Witter, puts the deal at more than $50 million. "This is more than double the total value of any of Celera's agreements," he said. "This is the broadest and potentially the most lucrative partnership Celera has to date. Pfizer will gain access to five of Celera's databases: human gene index, fruit fly genome, mouse genome, human genome and SNPs."

Lind estimated that half of the money Celera will receive will be in subscription fees, with the rest tied to the gene discovery activities.

For its part, Palo Alto, Calif.-based Incyte said its agreement with Pfizer is also its biggest to date.

"Pfizer was our first customer. We started with them in 1994 and have had several expansions of our collaboration," said Roy Whitfield, Incyte's CEO. "We've never announced the financial details of our deals but this is much bigger. It's humongous."

Rachel Leheny, executive director of Warburg Dillon Read LLC in New York, puts the figure for Incyte at around $50 million. "I figure it's about north of $12 million, maybe even north of $15 million per year for three years, and that's not counting royalties. There's also a little more up front," she said. "It's the first time they're getting prepaid royalties."

Celera, based in Rockville, Md. will combine its expertise with New York-based Pfizer to identify a large number of novel drug target genes derived from Celera's human genome sequencing. The collaboration will focus on selecting drug targets from the thousands of genes discovered by Celera's high-throughput gene discovery pipeline.

On a non-exclusive basis, Pfizer will get isolated full-length genes to incorporate into its discovery, development and commercialization pipeline for small-molecule therapeutic products.

"We have the right to re-license them for other companies," Venter said. "We don't charge royalties on our databases and the genes we discover. It gives companies the freedom to operate and it helps provide incentives to become clients."

For its money, Pfizer will have access to five databases developed by Celera: the Celera Human Gene Index, which provides a set of human genes derived from its expressed sequence tag (EST) sequencing program; the Drosophila Genome Database provides the complete Drosophila melanogaster genome sequence, which is illustrated with gene, protein and biological information, while the Human Genome Database is being developed to provide the complete sequence of the human genome and the entire collection of human genes with links to associated biological and disease information; the Celera SNP Database is a comprehensive source of single nucleotide polymorphisms and includes SNP data from the sequencing of several individuals; and the Mouse Genome database allows for comparative analysis with the human genome.

To date, Celera has completed the sequencing of more than 2.7 billion base pairs - letters of genetic code - of human genomic DNA.

Pfizer's deal with Incyte calls for the two companies to jointly analyze all available sequence data and develop full-length clones for many pharmaceutically relevant drug targets in the human genome. Incyte plans to file patent applications on these drug targets and license them broadly to subscribers to its services.

"This has never been done before," Whitfield said. "We are combining the resources and mining the data to a disease directly to the target. The objective here is quite bold. We are compiling a comprehensive portfolio of all drug targets from the human genome and getting patents on them. It's a major event in the history of pharmaceutical research."

Pfizer will take the full-length clones, each of which is a physical copy of an entire gene, for use in high-throughput screening of potential drugs. Researchers will focus on genes that are known to respond to existing drugs, Whitfield said.

So far, Incyte has filed patent applications on more than 50,000 individual genes and has been issued 453 patents.

In addition, Pfizer licensed an undisclosed number of potential future pharmaceutical products developed using Incyte's proprietary sequences.

Celera is an operating unit of PE Corp. Its stock (NYSE:CRA) closed Monday at $51.312, up $7, or 16 percent. Incyte's stock (NASDAQ:INCY) closed Monday at $24.50, up $1.50.