PARIS - Genset filed patent applications for two genes found to be associated with Zyflo-induced hepatotoxicity. It made the discoveries as part of its joint pharmacogenomics research program with Abbott Laboratories, with which it signed a collaboration agreement in July 1997, and earned a milestone payment as a result.

The program called for Genset to study patient responses to the anti-asthmatic drug Zyflo (zileuton), a 5-lipoxygenase inhibitor, in order to identify markers and genes involved in the susceptibility to hepatotoxicity of patients treated with the drug. In clinical trials of Zyflo, abnormally high levels of ALT enzymes were reported in some 4 percent of patients, resulting in a need for periodic liver enzyme monitoring.

Since genetic differences are thought to affect patients' responses to pharmaceutical compounds, discovering the complete genetic basis for response to Zyflo will make it possible to identify patients likely to suffer hepatotoxicity as a result of being treated with the drug and to customize Zyflo for specific subgroups of patients.

To determine the origins of individual variations in Zyflo response, Genset used its high-resolution mapping and high-throughput sequencing and genotyping technology to select sets of densely-spaced proprietary biallelic markers, and run case-control association studies that compared the genomic variations in DNA samples taken both from patients who developed hepatotoxicity and from those who did not. The studies led Genset to conclude there were significant genetic associations with Zyflo-induced hepatotoxicity, and subsequent statistical analysis showed that about one-third of the affected population carried these gene variants.

Under its agreement with Genset, Abbott has the exclusive license to develop, produce and market assays based upon genes discovered in the course of their joint pharmacogenomics program.

Meanwhile, the French company announced a 72.7 percent jump in its quarterly net loss for the three months ended June 30, relative to the second quarter of 1998, as a result of a 45.8 percent increase in research and development outlays. Its net loss amounted to Euro6.1 million (US$6.5 million) in April through June this year, against Euro3.5 million in the same three months of 1998, with revenues amounting to Euro6.56 million and R&D spending to Euro10.8 million.

For the first six months of this year, Genset's net loss rose to Euro10.7 million (US$11.4 million) from Euro7.8 million in the first half of 1998. R&D spending was up 31.5 percent to Euro20.6 million, while revenues increased by 12.2 percent to Euro13.2 million. As of June 30, the company had cash and short-term investments of Euro37.4 million, down from Euro50.2 million at the end of 1998.

The rise in R&D spending reflects the expansion in the Paris-based company's genomics research activities, as a result of which its R&D staff increased from 262 to 361 between mid-1998 and mid-1999. The company expects its research spending to increase in the future as it adds new research programs to its present activities. As a result, it expects losses to continue for the next few years, pointing out that "the amount and duration of such losses will depend largely on the level of its continued investment in genomics research activities and the timing of future strategic alliances."

Although R&D spending will continue to rise through 1999, chief financial officer Deborah Smeltzer does not expect that to result in a more rapid rundown in the company's financial reserves. Genset consumed around $22 million of its reserves in 1998 and she anticipates a depletion rate of no more than that in 1999.