By Debbie Strickland

CuraGen Corp. has lined up its fourth collaborator in less than a year with a deal to screen ArQule Inc.'s compound libraries against its own genomics-based biological targets.

The agreement does not provide for payments to either party. Instead, the companies will share ownership rights of any lead compounds equally, and will split any revenues upon commercialization. To identify those leads, CuraGen will screen the compound libraries against biological targets using its CombiGen technology and HitCalling database.

"This is [ArQule's] standard sort of biotech deal," said John Sorvillo, vice president for business development at Medford, Mass.-based ArQule.

ArQule has agreements with 17 other biotechnology firms, plus seven "major company" collaborations. The company's shares (NASDAQ:ARQL) closed Tuesday at $19.50, up $0.375.

CuraGen also has collaboration agreements with Biogen Inc., of Cambridge Mass.; Pioneer Hi-Bred International Inc., of Des Moines, Iowa; and Genentech Inc., of South San Francisco. Combined, these deals are worth up to $113 million plus royalties for New Haven, Conn.-based CuraGen, which is in registration for an initial public offering (IPO).

In the ArQule deal, CuraGen's screening system will take on the combinatorial chemistry firm's Mapping Array libraries to identify lead drug compounds for cardiovascular disease, endocrine and metabolic disorders, autoimmune disorders and cancer.

ArQule will employ its Directed Array lead optimization program on any hits. From its other collaborations, ArQule has more than 50 lead optimization projects under way.

CuraGen's appeal was its ability to "go from gene to screen," said Sorvillo.

"They were looking for a chemistry partner to supply the engine half, so this was a very good fit," he said.

CuraGen officials were unable to comment due to the Securities and Exchange Commission's "quiet period" restrictions related to the IPO. The company's registration statement, first filed in October, does not say how many shares are expected in the offering, nor what the pricing is likely to be. As of Sept. 30, CuraGen had $20.8 million in cash, following a net loss of $4.1 million for the first nine months of 1997.

The Genentech and Biogen deals both provide access to CuraGen's genomics platform for therapeutic applications, while the Pioneer Hi-Bred collaboration will use genomic analysis techniques to identify genes responsible for superior performance in crop seeds.

CuraGen's platform consists of four components: GeneCalling, to identify genes and analyze their expression; PathCalling, to characterize the roles of genes and their related proteins in biological pathways; HitCalling, for the identification of small-molecule drug candidates; and GeneScape, a unifying bioinformatics operating system. *