By Mary Welch

Gene Logic Inc. hit the deal-making jackpot this week as it entered into a genomics association with Hoechst Schering AgrEvo GmbH for at least $45 million and a pharmacogenomics partnership with American Home Products Corp. that could become just as lucrative.

"We're real happy with both," said Mark Gessler, senior vice president of corporate development and the chief financial officer of Gaithersburg, Md.-based Gene Logic. "The [American Home Products] deal drives at the base — the heart — of our business philosophy, which is using genomics to speed drug discovery. It also is another step for the company. We started in target discovery, began development of screening technology and now, with [American Home Products], we'll be looking at ways to prioritize lead compounds.

"The AgrEvo collaboration," Gessler observed, "uses the same tools but now applied to agriculture. We'll use gene expression for the development of improved crops and crop protection products."

Tuesday, when the American Home Products deal was reported, Gene Logic's stock (NASDAQ:GLGC) declined $1 to $7. However, news of the AgrEvo pact Wednesday sent the company's shares soaring $3.125 to close at $10.125, a 45 percent jump.

The agreement with American Home Products, of Madison, N.J., involves using Gene Logic's gene expression technology to develop databases that can predict toxicty of the drug maker's compounds. Forecasting adverse side effects based on changes in gene expression is designed to speed the process of drug candidate selection. It also could reduce reliance on animal testing.

Knowing Toxicities Reduces Development Risk

"When you get potential hits, one way to sift through them is a toxicity rating," Gessler said. "Ideally, we'll find patterns of gene expressions that would be indicative of human toxicity."

American Home Products will have access to Gene Logic's Flow-thru Chip technology, a reusable gene microarray for high-throughput analysis of changes in gene expression.

During the first year of the agreement, costs will be shared for selecting compounds and tissue samples to be analyzed. After the first year, Gene Logic will have the right to sell access to the gene expression databases developed.

"This is a non-exclusive deal," said Gessler. "We can take this technology, the databases, Flow-thru Chips and other products developed and license them to other pharmacological clients."

Although financial terms were not announced, the financial structure, over time, could be much more significant than the arrangement with AgrEvo.

In the deal with Frankfurt, Germany-based AgrEvo, Gene Logic will identify genes for the development of crop protection and improvement products.

In the three-year exclusive pact (with a possible extension of up to five additional years) AgrEvo agreed to pay more than $45 million to develop genetic databases for a variety of crops and research support. Hoechst Schering AgrEvo is a joint venture between Hoechst AG, of Frankfurt, and Schering AG, of Berlin.

Gessler said the $45 million does not include milestone payments, which could bring additional millions of dollars into Gene Logic's coffers.

"We were interested in this area and wanted a collaboration with a leading bioagricultural company," he said. "There are a lot of opportunities out there for crop products based on genomics." *