By Randall Osborne

Axys Pharmaceuticals Inc. discontinued its partnership with Glaxo Wellcome plc to discover genes associated with Type II diabetes and obesity.

"There's every likelihood we'll be looking for a partner under a broader collaboration," said Daniel Petree, president and chief operating officer of South San Francisco-based Axys.

Under the terms of the dissolution agreement, Axys gets exclusive rights to all obesity family samples and data, along with non-exclusive rights to certain Type II diabetes samples and data. London-based Glaxo keeps exclusive rights to some Type II diabetes samples and data.

Axys acquired the pact with Glaxo last year, when Arris Pharmaceutical Corp., of South San Francisco, took over La Jolla, Calif.-based Sequana Therapeutics Inc. (See BioWorld Today, Nov. 4, 1997, p. 1.)

Petree said a broader partnership with another firm would include drug discovery efforts under way by Arris at the time of the takeover.

With Glaxo, Axys has identified distinct regions of DNA believed to contain genes associated with diabetes. Axys has established an in-house program in diabetes and obesity that extends from gene identification to lead generation on selected targets.

Companies Say Termination Mutual

"A large amount of money was invested in collecting patient samples and genotyping," Petree said. "Axys gets access to a lot of that positive work."

Although "lot of good things happened," he added, "the upside was less than we would like to achieve."

Glaxo, for its part, seemed "far from disappointed" with Axys' move, Petree said.

"They're bringing a lot of their genomics work in-house, and handle external [work] mostly with academic collaborations," he said. "They're going to pursue it further."

Sequana signed the five-year deal with Glaxo in 1994 for diabetes and expanded it two years later to include obesity. Terms were not disclosed, but Sequana was awarded research milestone payments in April 1996 and September 1997. (See BioWorld Today, July 29, 1994, p. 1, and Feb. 21, 1996, p. 1.)

Termination of the Glaxo deal is "something we've been anticipating" since the merger, Petree said.

"We didn't know how it was going to turn out, but at the time of signing the merger documents, Sequana indicated it was re-evaluating the relationship [with Glaxo]," Petree said.

Axys's stock (NASDAQ:AXPH) closed Friday at $7.50, up $0.50. *