By Randall Osborne

CuraGen Corp. entered a pharmacogenomics deal potentially worth more than $48 million with Glaxo Wellcome plc.

The agreement, which will last up to five years, provides for a $2.75 million payment each year from Glaxo to CuraGen, plus milestone payments and royalties on any products emerging from the collaboration. If the collaboration runs the full term, it will be worth $13.75 million.

“We're looking at about another $35 million in [potential] milestones,“ said Gregory Went, executive vice president of New Haven, Conn.-based CuraGen. A percentage of these would be earned beyond the five-year term of the deal. Went could not estimate how much might be collected within the term.

CuraGen is working with London-based Glaxo's subsidiary, Glaxo Wellcome Inc., in Research Triangle Park, N.C.

Glaxo is paying for access to CuraGen's GeneCalling, for discovery of gene expression discovery and analysis; and SeqCalling, a database product launched last month. The former will be used to profile gene expression changes in animal models treated with Glaxo's drug candidates, which have not been specified.

“It's unrestricted,“ Went said. “It's really based on individual therapeutic areas, and we're pretty stocked up across a broad range. We'll be working with preclinical candidates at varying stages and, given the number of drugs we can do per year - which is less than 100 but more than 10 - this has a very substantial potential, in terms of milestones and royalties.“

Went said the company has sequenced rat liver, brain and heart genes. “It's yielding a lot of fruit for us right now,“ he said. “It's nice to have sequenced all the genes in the tissue, prior to going into an experiment, and we can move it up to dogs, monkeys and other higher mammals.“

Glaxo First SeqCalling Subscriber

Glaxo, as the first subscriber to SeqCalling, which provides information on almost 75 percent of the expressed genes from selected tissues, hopes to perfect its drug candidates, as both companies use the information to identify new genes with potential to serve as surrogate markers.

Earlier this week, CuraGen said it has used SeqCalling to discover more than 60,000 human genetic variations that may be responsible for diseases. The single nucleotide polymorphisms are believed to be useful as markers in identifying disease genes and genetic differences that may determine the response of a given patient to disease and drug treatment.

CuraGen went public in March with an initial public offering that raised $45.5 million. The company's stock (NASDAQ:CRGN) closed Friday at $7.375, up $0.687. n