By Mary Welch

Maxygen Inc. and Pioneer Hi-Bred International Inc. signed a deal worth up to $85 million to accelerate the development of advanced crop genetics in corn, soybeans and other crops with Maxygen's "DNA shuffling" technique.

Under the agreement's terms, Pioneer, based in Des Moines, Iowa, will make a $5 million equity investment in Maxygen, pay $2.5 million in start-up costs and contribute $27.5 million over the next five years for research and technology development.

Maxygen also could receive up to $50 million in milestone payments related to commercial success.

The deal is Maxygen's "first large, strategic collaboration," said Russell Howard, president and CEO of the Santa Clara, Calif.-based company.

"We have had a series of technical projects, but they were not large, nor were they strategic partnerships, so we didn't talk about them," he said.

DNA Shuffling Aims To Shorten Time To Market

Maxygen's molecular-level technology, known as DNA shuffling, when used with other genetic technologies, allows the company to shorten the time it takes to deliver advanced crops to the market, said Donna Ramaeker Zahn, spokeswoman for Pioneer.

"The benefit [of the Maxygen deal] to Pioneer is that it capitalizes on our early work in genomics, and will allow us to create some new varieties of products that will increase our customers' productivity," Zahn said.

Howard said DNA shuffling technology allows molecular biologists to use one of the tools of natural evolution to create an improved plant version quickly.

"In nature, you have sexual recombination, but it's a one-to-one process," he said. "You combine DNA and get a process of mutation, selection and amplification. What our technology offers is the ability to perform this recombination in the laboratory. It's even better than in nature, because we can take the existing variety of several genes and put them into a single tube and recombine simultaneously. It's the classic breeding process - but in the laboratory."

Maxygen begins with a gene family's natural diversity, or creates it by mutagenesis, and then "shuffles" to create even more novel genes. Genes are fragmented and randomly put back together. Those that encode proteins with the desired novel properties are then selected, using high-throughput screening assays.

Maxygen and Pioneer will work on the gene combinations, which Pioneer will grow and test in the field. In addition to corn and soybeans, the companies will shuffle genes for sunflower, canola, wheat, alfalfa and sorghum.

Maxygen was formed in 1997 as a spin-off of London-based Glaxo Wellcome plc and Santa Clara, Calif.-based Affymax Research Institute, a wholly owned subsidiary of Glaxo. DNA shuffling was developed by an Affymax scientist.

Howard said making the deal with Pioneer was particularly gratifying. "They have the premier corn germ plasm," he said. "That's their thing."

Pioneer claims the world's largest plant genetics library, with sequence information for about 80 percent of the genes in corn. Zahn said corn has "about 100,000 genes, and we have discovered more than 50 genes that contribute to the quality and agronomic strain in corn."

Howard said Maxygen is investigating other opportunities in agricultural biotechnology. n