By Lisa Seachrist

Washington Editor

Nanogen Inc. and Aventis Research & Technologies GmbH Co. KG, an affiliate of Hoechst AG, have expanded their drug discovery collaboration into two new areas.

The collaboration could net San Diego-based Nanogen $12 million over the next 26 months, including an up-front initiation fee of $2 million. The deal adds two new programs to a drug discovery program initiated in 1998.

"The funding dollars in this deal are important," said Kieran T. Gallahue, vice president and chief financial officer at Nanogen. "What's most valuable is the deal is an indication of the confidence Aventis has in Nanogen and the technology."

Nanogen's technology incorporates a proprietary semiconductor microchip into a fully automated system designed to rapidly identify and analyze any test sample containing charged molecules. The initial collaboration between Aventis and Nanogen focused on combining Nanogen's electronic array technology and Aventis R&T's proprietary pRNA and Exponential Library by Association of Sublibraries (ELIAS) technologies.

With the expansion of the collaboration, Aventis and Nanogen are developing a method for using electronic bioarrays to speed differential gene expression studies. In addition, the two companies are moving the Nanogen technology away from the semiconductor microchip to create a high-throughput screening tool for kinase analysis using electronics.

Under the terms of the collaboration, Nanogen will retain full commercialization rights for drug discovery technologies developed by the new program. Aventis and its affiliates will receive a non-exclusive license to the technologies for internal use.

The collaboration is set to expire in 26 months. While Gallahue doesn't expect to have a drug discovery product ready for market at that time, he does expect to have made significant progress toward marketable products.

"These are very aggressive goals, but we've got the scientist to meet them," Gallahue said.

Nanogen's stock (NASDAQ:NGEN) closed unchanged Tuesday at $7.12.