By Randall Osborne

Marching ahead with its technology using plant and marine extracts for making new chemicals, Phytera Inc. has signed a new deal with Eli Lilly and Co. and lengthened the term of an existing pact with Tsumura & Co. by one year.

Malcolm Morville, president and CEO of Worcester, Mass.-based Phytera, said the Lilly partnership is "the strongest economic deal we've done so far," and uses more of Phytera's capabilities than any of the company's earlier collaborations.

Under terms of the agreement, focused on drugs to diagnose, prevent and treat infectious fungal diseases, Phytera will contribute antifungal screens as well as natural product extracts from its ExPAND plant cell culture and MARINE microbial libraries.

Phytera also will use its natural product chemistry know-how for bioassay-guided fractionation, isolation and structural characterization of active extracts.

"There's a major molecular biology component," Morville said. "We put together screens around multiple drug-resistant knockouts, and we did that with our own money."

However, he said, Indianapolis-based Lilly will pay for the continued operation and evolution of those screens, to be used with Lilly's compounds. In exchange for worldwide rights to products, Lilly also will make an up-front equity investment in Phytera, fund research activities and make milestone payments as well as handle downstream profiling, lead optimization and other costs of development and commercialization.

"It's an extremely broad deal," Morville said.

Tsumura Looking For Arthritis, Allergy Drugs

The collaboration with Tsumura, of Tokyo, was begun in 1996 and takes aim at small molecules for treatment of rheumatoid arthritis and allergies.

"It was originally a three-year deal, with a right of termination after two," Morville said. "We've extended it through a fourth year. That's a full commitment." The agreement expires in June 2000.

"We've been running screens and identified a number of lead structures against certain of those screens," Morville told BioWorld Today.

In the Tsumura deal, Phytera is providing natural product chemistry support for bioassay-guided fractionation of the active compounds, while Tsumura handles medicinal chemistry and candidate optimization with lead molecules.

Tsumura is making research payments and could make milestone payments as any products developed from the partnership advance. The companies have split ownership of products, with Phytera taking exclusive North American rights and Tsumura retaining exclusive rights in the rest of the world.

Originally including only the ExPAND extracts, the extended Tsumura collaboration will add MARINE, Morville said.

Phytera manipulates plant cells and marine microbes in culture to modulate genomic expression, change metabolic pathways and, often, create chemicals not found in the originating species.

"We've spent the last several years working with academic laboratories to produce screening systems we think are potentially important, including [those for] antibacterials and antifungals," Morville said.

"The screening systems we use for antifungal discovery are similar but differentiated from our antibacterial systems, in terms of therapeutic endpoints," he added. "We can separate them easily."

Such flexibility allows for internal programs as well as those for which Phytera can seek partners. For the past five years or so, the company has focused on about 25 different screens.

"We turn them over," Morville said. "One six months we're running a certain six or eight screens and the next six months, a different six or eight."

Using the screens along with natural product chemistry and molecular biology, Phytera has identified its own drugs and is working on pushing them through the early stages of study.

"We have an antiviral product in late-stage development, and we're aiming to have that in the clinic next year," Morville said. "Taking products partly down the road in the value chain — Phase I [trials], Phase II — can be extremely important."

But the company has made plenty of partnerships based on its extract libraries. Collaborators include: NeuroSearch A/S, of Glostrup, Denmark; Amersham International plc, of Little Chalfont, U.K.; Galileo Laboratories, of Sunnyvale, Calif.; and Chiron Corp., of Emeryville, Calif.

"We intend to take a little time, perhaps the rest of the year, to make sure those deals are moving forward well," Morville said. "But we'll be working hard on adding to that deal pile." *