By Randall Osborne

Venturing into agricultural biotechnology, Exelixis Pharmaceuticals Inc. entered a collaboration worth up to $30 million with Bayer AG to identify screening targets for new crop protection agents.

"It gives us more bang for the buck," said George Scangos, president and CEO of South San Francisco-based Exelixis.

Under the terms of the deal, expected to be made public today, Exelixis could receive up to $30 million in license fees, research support and milestone payments. Included in the agreement are an up-front fee and royalties beyond those customary in such partnerships, Scangos told BioWorld Today.

"The agrichemical industry is unused to paying royalties over 1 percent," as compared to the common 7 percent in pharmaceutical deals, he said. Royalties in the Bayer pact are "substantially higher," he added.

Exelixis performs genetic modifier screens using the fruit fly and roundworm models to identify key regulatory molecules. The models work well because their structural and functional homology with humans is strong, as well as their genetic amenability to rapid, large-scale mutagenesis.

"We can get a very detailed understanding of the similarities and differences," Scangos said. "In, fact they're remarkably similar, although we do find insect-specific things."

For Leverkusen, Germany-based Bayer, Exelixis will use its PathFinder screening technology along with its fruit-fly expressed sequencing tag (EST) data base, called FlyTag, plus bioinformatics tools to identify and validate targets, and develop assays for high-throughput screening.

The deal also includes Exelixis' development of an EST database for a pest species chosen by Bayer, which will use assays developed by Exelixis to screen against its libraries of chemical compounds. Bayer plans to evaluate lead structures in vivo, from which it will develop crop protection products.

Five-Year Deal Could Be Extended

Set for five years, the deal could go longer, although Scangos said the company "ought to be able to deliver targets rather quickly over the next couple of years. We have some already."

Exelixis began building its agricultural biotech capabilities about a year ago, Scangos said.

"It became clear to us that a lot of what we're finding could have applicability to finding targets for better pesticides," he said.

By designing pesticides against specific gene targets, Exelixis hopes to develop classes of active compounds, reducing the likelihood that bugs will develop cross-resistance to multiple pesticides.

Scangos scoffs at claims that creating anti-pest organisms through agricultural biotech is dangerous.

"I think all of that noise, frankly, is nonsense," he said.

"If you go back to the late 1970s, those are exactly the same arguments you heard about recombinant DNA," Scangos added. "The fact is, in nature, genes get moved around, and people have been genetically altering plants and animals for thousands of years. There are no wild cows. It's genetic manipulation of those species to make them more useful for humans. Only the methods have changed now."

In February 1997, Exelixis acquired an exclusive license to the "entire" Notch regulatory pathway, which is important in cell differentiation and believed to be implicated in leukemia, cancer, stroke and dementia. Two months later, the company raised $15.8 million in a private placement. (See BioWorld Today, Feb. 21, 1997, p. 1, and April 15, 1997, p. 1.) *