By Randall Osborne

With an active lead compound as part of the deal, along with half of worldwide marketing rights, Signal Pharmaceuticals Inc. entered a pact with Nippon Kayaku Co. Ltd. to develop and commercialize the Tokyo-based company's drug for treating peripheral neuropathies.

"It's a different kind of deal," said Alan Lewis, president and CEO of Signal.

Nippon Kayaku already has shown the drug candidate, described as a small molecule nerve growth factor mimetic, is active in animal models of neuropathy induced by chemotherapy.

And Signal already has evaluated the compound using its proprietary human neuronal cell lines, and further validated its activity in vitro.

News of the partnership — Signal's sixth — was expected to be released today. It was put together "incredibly quickly," Lewis said.

Under terms of the agreement, Nippon Kayaku will provide research funding to Signal for the first two years, and will continue its animal pharmacology studies of compounds generated.

Signal will perform combinatorial chemistry and use the neuronal cell lines to optimize compounds and characterize their actions.

The two companies will share marketing rights worldwide except in Japan, where Nippon Kayaku will retain exclusive marketing rights.

Peripheral neuropathies result from injury to the peripheral nerves and afflict about 2 million people in the U.S., many of them diabetics who suffer pain and numbness in the hands and feet, weakness of limbs, bladder infections and impotence.

In 1996, Signal partnered with Roche Bioscience, of Palo Alto, Calif., to develop peripheral neuronal cell lines that Roche would use to find small molecule compounds for pain and lower urinary tract disorders. (See BioWorld Today, Sept. 19, 1996, p. 1.)

"We delivered them last year," Lewis said. "Nippon Kayaku heard about the deal with Roche and came knocking on the door."

Bradley Gordon, vice president of finance and chief financial officer of Signal, said, "The research and development funding [in the Nippon deal] is on par with Roche." Financial terms of neither deal were disclosed, but were enough to cover costs.

"You traditionally won't see as much in milestones or other payments downstream" in a deal granting wide rights to sell, Gordon said.

"We'll take half the world market, excluding Japan, any day," he added. *