By Jim Shrine

Special To BioWorld Today

Paradigm Genetics Inc., founded last year on the idea that the consolidation of agriculture companies in recent years has left a void in start-ups devoted to research, saw the notion pay off in a potential $40 million deal with Bayer AG to find screening targets leading to new herbicides.

Specific terms of the deal were not disclosed, but the $40 million includes up-front money, research funding and payments for research deliverables, such as a certain assay, said John Ryals, president and CEO of Raleigh, N.C.-based Paradigm, which may also receive product development milestones and "success fees" for any product reaching the market.

"We're seeing a trend now that those companies are drifting more and more to specializing in product development and looking to small companies to supply innovative product concepts," Ryals said. "In agriculture, that is starting to pick up again after being kind of dead for eight years."

Paradigm will analyze the function of every gene in rice and a plant called arabidopsis, and use computer science to determine the function of those genes and which may make good targets, Ryals said. Bayer, of Leverkusen, Germany, then will use its chemical libraries with Paradigm's high-throughput screens for leads.

"A good target is something that is going to produce the next blockbuster herbicide," Ryals said. "That could be a signal transduction molecule, a receptor of some sort, virtually anything."

Paradigm "brings an industrialized approach to plant genetics," Ryals said. "There's a genomics component and a lot of high-throughput genetics. We have proprietary software and databasing systems. It's a clean marriage between computer science and industrial-strength biology."

Bayer officials could not be reached, but the company said in a news release the collaboration underscores its intention to collaborate with companies whose use of innovative approaches could lead to development of effective crop protection products.

"Paradigm is a particularly suitable partner in research into identifying gene function because of its track record in discovering biochemical characteristics in plants," said Jochen Wulff, general manager of Bayer's crop protection business group.

Paradigm, which has about 45 employees, was founded in September 1997 by Ryals and three other senior managers from Research Triangle Park, N.C.-based Novartis Crop Protection, a subsidiary of Novartis AG, of Basel, Switzerland.

"There are very few first-generation agriculture companies left," Ryals said. "We set about trying to do it with a genomics technology platform."

The company received seed financing in February. In June, it raised $12 million in its first round of venture financing. Investors included Intersouth Partners, of Durham, N.C.; Polaris Venture Partners, of Boston; Innotech Investments Ltd., of London; TransAmerica Business Credit, of Farmington, Conn.; and Phoenixcor Financial Services, of Norwalk, Conn.

Paradigm also is seeking a partner in its fungicides program. It is developing a strategy in plant genetic engineering, Ryals said, and may establish an insecticides group. *