Pharmacopeia Signs $60M Deal With Schering-Plough

Second Major Pact In Less Than A Week

Pharmacopeia Signs $60M Deal With Schering-Plough

By Mary Welch

Pharmacopeia Inc. signed its second major deal in less than a week, a $60 million pact with Schering-Plough Corp. to design libraries and identify and optimize lead compounds against therapeutic targets.

The five-year agreement expands earlier collaborations to utilize Princeton, N.J.-based Pharmacopeia's proprietary drug discovery technologies.

"It's been a very good week for Pharmacopeia, and we've been celebrating," said Sue Rodney, manager of investor relations for the firm.

Under the terms of the deal, Pharmacopeia will create new combinatorial libraries for use by Schering-Plough scientists, and will undertake various lead identification and optimization programs on the company's behalf. Areas of therapeutic interest were not disclosed.

Rodney said the agreement with Madison, N.J.-based Schering-Plough is broader than the one with Schering AG, of Berlin, disclosed late last month. In the German collaboration, Pharmacopeia will focus on high-throughput screening and will screen its multimillion-compound sample collection of diverse, small molecules against unnamed targets. (See BioWorld Today, Oct. 28, 1998, p. 1.)

"This new deal is more soup to nuts," she said.

The Schering-Plough pact calls for Pharmacopeia to perform two assignments. The first is to use its small molecule combinatorial chemistry to make large libraries of rationally designed compounds for Schering-Plough to screen against its internal targets. The second is to design an entire discovery program around Schering-Plough's targets, test a large number of compounds against them, find leads and make them more potent and selective before returning them to Schering-Plough.

"Essentially, we'll design and screen libraries, get a hit, tweak it and then turn it over to them for clinical development," Rodney said. "It's a more inclusive job. And, for the [length of the] five-year deal, the $60 million is in committed research funding. The value may be more, as milestone and royalty payments come into the picture."

Pharmacopeia began its alliance with Schering-Plough three years ago, in a $75 million research agreement that focused on cancer and asthma. Schering-Plough made a $20 million equity payment. About 40 percent of the original $75 million has been paid, Rodney estimated. (See BioWorld Today, Dec. 23, 1994, p. 1.)

"There were three preclinical milestone payments made," she said. "In addition, we are entitled to any royalty payments as well as additional milestones from that agreement."

One milestone payment came in March 1997, when Schering-Plough decided to pursue medicinal chemical development on a lead compound identified by Pharmacopeia in the area of cancer. In September 1997, the collaboration was extended a year in order to add a new specific target in hepatitis. This previously undisclosed expansion yielded less than an additional $5 million in revenue, plus potential milestone and royalty payments, Rodney said.

Pharmacopeia's stock (NASDAQ:PCOP) closed Tuesday at $10.125, down $0.375. n