LONDON - Prolifix Ltd., which specializes in the modulation of cell proliferation, has raised #4 million in a private placement and agreed to a partnership with Eli Lilly and Co. and Chugai Pharmaceuticals to work on small-molecule drugs to regulate the cell cycle transcription factor, E2F.

Lilly, of Indianapolis, and Chugai, of Japan, will make equity investments in Prolifix, fund research, and make milestone payments. In return they will have exclusive worldwide marketing rights for any drugs, with Prolifix receiving royalties. While Chugai has collaborated with Prolifix since 1995, Lilly is a new partner.

Birgit Norinder, CEO or Prolifix, told BioWorld International, "We can't discuss how much the deal is worth, but apart from the equity investment, the partners will fund research for two years, with an option to extend at the end of the period, if we reach certain milestones."

The tripartite deal will involve the two pharmaceutical companies splitting development work. "In terms of the development program we will work together, and it will make sense for one partner rather than another to carry out some of the research. For example, Lilly has got a major screening facility," Norinder said.

She noted that there is no conflict in relation to commercialization. "Between them they divide the market," she said. By doing the project jointly it becomes possible to market any products simultaneously in all markets.

The money from the partners and the private placement will be sufficient to fund Prolifix, which is based in Abingdon, for the next two years. By this time the company expects to have compounds in clinical trials. "We have reached the stage of taking several compounds into lead optimization in E2F and other programs," Norinder said. "We hope to get into the clinic by 2001."

Other programs are in the areas of cervical cancer, hormone-regulated cancer and angiogenesis, and the company also is working on anti-fungals. Norinder said she is looking at other partnering opportunities, "but I don't intend to partner everything."

The #4 million funding came from existing investors including Atlas Venture, 3i plc and GIMV, with the Swedish investment group HealthCap coming in as a new investor.

E2F is essential for the normal progression of the cell cycle, and if E2F regulation goes wrong it can result in cancer. Prolifix, founded in 1994 around technology from the Medical Research Council, has a broad portfolio of intellectual property in the area of E2F regulation and its application to drug discovery. The company has recently licensed rights to newly identified mechanisms by which E2F is normally controlled. These will be used by the collaborators to discover drugs inhibiting its activity.