By Vicki Brower

Special To BioWorld Today

Axys Pharmaceuticals Inc. has expanded its original osteoporosis agreement with Boehringer Mannheim and will now accelerate research to identify human genes related to the disease.

Since the original agreement, signed in May 1995 for a potential $50 million, Axys, of South San Francisco, has identified in primates discrete genetic regions linked to bone metabolism.

The 1995 collaboration was formed between Boehringer Mannheim GmbH, of Mannheim, Germany, and Sequana Therapeutics Inc., of La Jolla, Calif. Sequana was acquired by Arris Pharmaceuticals Inc., of South San Francisco, in November 1997 in a stock swap valued at $166 million. The merged companies were renamed Axys.

While financial terms of the expanded deal were not released, Boehringer Mannheim originally made a $6.25 million equity investment in Sequana over five years and was to contribute $14.75 million in research funding and milestone payments. The big pharma partner agreed to pay another $28 million for development of drugs and diagnostics based on the genetic discoveries.

In the intervening time since the original agreement, Boehringer Mannheim also has undergone changes — it was acquired by the Swiss pharmaceutical giant, Hoffmann-La Roche Ltd., of Basel, for $11 billion. The takeover, completed earlier this year, included Boehringer Mannheim's parent company, Corange Ltd., of Bermuda.

Since the January completion of Sequana's merger with Arris, Axys has been reviewing its ongoing partnered and in-house research programs, said chairman and CEO John Walker.

"The expansion of the partnership with Boehringer Mannheim is a result of this review," he added. Axys is looking at older deals and at forging new collaborations and ventures, he said.

The merger has resulted in no loss of research staff but rather an expansion of research capabilities, since there was no overlap in the science conducted by both companies.

New Business Areas Explored

The research and development staff of the new company is expected to continue to grow for some time, said Axys spokesman, David Generalli. Specifically, the firm is exploring a number of options to take advantage of new business opportunities in pharmacogenomics and agriculture using its technology platform.

Axys is focusing its discovery programs on three disease areas — inflammation, metabolic diseases and oncology — and has a research pipeline in each of these three programs that spans gene identification to drug development. By consolidating non-partnered research efforts, it expects to have new collaborations in place by the end of this year, Walker said.

Some administrative and management positions have been eliminated due to redundancy, saving Axys an estimated $3 million to $5 million annually.

Part of the Axys consolidation is the decision to move its functional genomics subsidiary, NemaPharm Inc., from Cambridge, Mass., to the company's South San Francisco-based high-throughput screening facility. The move is designed to accelerate chemical annotation studies to identify genetic targets and compounds that modulate their activity.

Axys also has sold its equity holdings in Aurora Biosciences Corp., of San Diego, raising $6.6 million in cash.

Axys' stock (NASDAQ:AXPH) closed Tuesday at $8.75, up $0.25. *