PARIS - Genset has announced the discovery of a new gene associated with prostate cancer and has identified several other genes that also could be linked with the disease. The discoveries were made as part of the Paris-based genomics company's research and development alliance with the French pharmaceutical company Synthélabo. On the strength of these successes, the two companies have decided to extend their collaboration for another year.

Genset's agreement with Synthélabo was signed in May 1996 and provided for it receive a total of FFr355 million (US$59.5 million) over two years. Within six months Genset had completed the mapping phase, which was expected to take 12 months, and had identified several chromosomal regions of the human genome containing genes associated with prostate cancer.

In November 1996, Genset filed a patent application which covered not only that locus but what the company described as new loci identified on other chromosomes that might prove more important. The following month it received its first milestone payment from Synthélabo.

The extension agreement provides for Genset to receive further research and development funding, as well as additional payments for the discovery of any other gene associated with prostate cancer. Synthélabo retains an option for further collaboration with Genset in the future and for the joint development of screening tests for the genes discovered. If it exercises that option, their collaboration will be extended for another 12 months.

It is generally believed that there are a number of genes associated with an individual's susceptibility to prostate cancer. Genset expects to discover and patent most of them during the course of its joint research program with Synthélabo, thanks to its proprietary genomics research technologies and in particular to its high-resolution map of the human genome's bi-allelic markers.

The completion of that map was one of the reasons for the increase in Genset's R&D outlays in the first quarter of 1998. They totaled FFr53.8 million, which was 18 percent more than in the fourth quarter of last year and 70 percent more than in the first three months of 1997, when R&D outlays totaled FFr31.7 million.

At the same time, the research and development funding Genset received from its pharmaceutical partners was nearly five times higher, at FFr31.45 million, in the first quarter of this year than the FFr6.5 million in the first three months of 1997.

Altogether, Genset's revenues increased 150 percent, to FFr38.9 million in the first quarter of this year from FFr15.1 million in the corresponding period of 1997.

With its sales of synthetic DNA (oligonucleotides) dipping to FFr7.5 million from FFr8.6 million, research and development income accounted for 81 percent of Genset's revenues in the first quarter of this year, compared with 43 percent in the corresponding three months of 1997. The result was an operating loss of FFr33.6 million, much the same as in the first quarter of last year (FFr34.4 million), and a net loss of FFr27.8 million (compared with last year's FFr26.8 million).

The slightly higher net loss reflects a FFr1.03 million drop in the company's research and development tax credit between the first quarter of 1997 and the first quarter of 1998, from FFr3.28 million to FFr2.25 million. The company's financial assets declined by no more than FFr16.5 million between March 1997 and March 1998; as of March 31, it held cash and securities totaling FFr445.2 million, as against FFr461.7 million a year earlier. *

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