By Randall Osborne
As it made public its latest partnership — a $9 million deal with Hoechst AG, which became effective last month — Scriptgen Pharmaceuticals Inc. registered for an initial public offering (IPO) projected to raise nearly $45 million more.
Scriptgen, of Medford, Mass., received a patent early this year on its high-speed drug discovery system for identifying compounds that bind to target proteins, called the Any Target Ligand Affinity Screen (ATLAS), a high-throughput pre-screening process.
The deal with Hoechst subsidiary, Hoechst Marion Roussel Inc., is to identify fungal targets and develop antifungal drugs. Under its terms, Scriptgen will receive $6 million from Frankfurt, Germany-based Hoechst in technology access fees, plus a $3 million equity investment concurrent with the IPO.
Scriptgen also will get research and development funding from Hoechst, along with milestone payments and royalties on the sales of any drugs taken to market.
Three core technologies make up Scriptgen's arsenal.
The Genetics Assisted Target Evaluation (GATE) measures the effects of transiently removing a specific gene from a cell. By creating conditions similar to a drug's mechanism of action, the system predicts target behavior.
ATLAS and the Screen for Compounds with Affinity for Nucleic Acids (SCAN) measure the affinity of compounds that bind to targets even before the gene functions are well understood, so the company can deal with targets unsuitable for commonly used high-throughput screens.
Other Deals Include Lilly, Roche, Monsanto
Scriptgen also has a collaboration with Indianapolis-based Eli Lilly and Co., begun in May. Details of the deal were not disclosed, but two targets were selected by Lilly and two more may be selected next year, assuming certain milestones are met. The pact with Lilly was expanded in October for Scriptgen to screen additional compounds from its library. (See BioWorld Today, May 23, 1997, p. 1.)
Other partnerships are with Hoffman-La Roche Inc., of Nutley, N.J., (a subsidiary of Basel, Switzerland-based Roche Holding Ltd.) to identify drug candidates against a cancer-related target, and Monsanto Co., of St. Louis, to identify and validate fungal targets from plant pathogens as well as identify antifungal agents.
An alliance with Incyte Pharmaceuticals Inc., of Palo Alto, Calif., was formed to integrate Scriptgen's information on bacterial and fungal gene functions with data in Incyte's gene sequence database. (See BioWorld Today, Oct. 17, 1996 p. 1.)
Scriptgen's internal development focuses on anti-infectives, with four lead compounds. Two small-molecules show oral activity in animal models against fungal pathogens, including strains resistant to currently used drugs.
In its IPO prospectus, Scriptgen did not state the proposed number of shares to be sold or the projected price range. But the company listed an estimated total maximum amount of $44.85 million to be raised in the offering, including exercise of overallotment options by the underwriters.
Acting as underwriters for the initial public offering are SBC Warburg Dillon Read Inc., of New York, and Volpe Brown Whelan & Co., of San Francisco.
As of Sept. 30, Scriptgen had $197,000 in cash, with a net loss of $4.77 million for the first nine months of 1997. *