By Debbie Strickland

They don't pay taxes, work out or seek true love, but yeast are a lot like the people you know, genetically anyway.

That makes the one-celled, eukaryotic fungi — whose entire genome has been sequenced — rising stars in the functional genomics research under way at Acacia Biosciences Inc. The Richmond, Calif., company has developed an assay-based computer modeling system for drug discovery that is squarely centered on Saccharomyces cerevisiae and its 6,000 genes.

While dwarfed in number by Homo sapiens' estimated 70,000 genes (many of which are repeated), a sizable fraction of S. cerevisiae's genes are virtually interchangeable with those of humans.

Acacia's method of exploiting this happy similarity, a technological platform dubbed the Genome Reporter Matrix (GRM), caught the eye of Eli Lilly & Co., which has agreed to pay Acacia an undisclosed fee to generate chemical and biological profiles for a secret class of compounds. This is the company's first corporate partner since its inception in 1995.

"Using yeast as a model organism for lead optimization makes a lot of sense given the high degree of homology with human metabolic pathways," said William Current, of Lilly Research Laboratories.

Acacia's GRM, he added, has the potential to "make the drug discovery process more rational" and "should substantially accelerate the development process."

The system works like this: Yeast are exposed to a compound, and computers record and interpret the full range of biochemical activities at various times, mapping both primary effects and side effects. The system can profile the extent, nature and quantity of any changes in gene expression.

"Almost any process which the chemical perturbs or augments will ultimately result in a change in the pattern of gene expression," said Matthew Ashby, Acacia's director of biology. "By monitoring that and [noting] both the qualitative and quantitative changes in gene expression, we can identify what the bioactivity of that chemical or substance is, so we can readily identify the target of a chemical based upon the indirect effect on gene expression."

This process reverses the traditional drug discovery story line, Ashby said.

"What people normally do is look for chemicals for a specific target, and we're in a sense looking for targets for a specific chemical."

Instead of researchers picking targets — such as a particular cancer or infectious disease — and then trying an array of compounds to see if anything works, Acacia scientists start with the compounds, then characterize their activities and look for relationships to disease models.

President and CEO Bruce Cohen said that Acacia's method, in contrast to the "traditional" model, should reduce the risk of taking a flawed lead compound into development.

"Single-target-based screening doesn't change the probability of having a successful therapeutic emerge," he said, "because as long as you have the relatively narrow focus on a single biological target, no matter how good the assay gets, you're not going to get a sense of what that chemical is doing across the genome."

The process lends itself to fee-for-service corporate collaborations, in addition to the standard arrangement of joint clinical development and a milestones-and-marketing deal. Acacia, Cohen acknowledged, is borrowing strategies from Palo Alto, Calif.-based Incyte Pharmaceuticals Inc., which just posted its third straight profitable quarter. The Incyte business model calls for selling non-exclusive access to its various databases of gene sequences.

"For the most part," said Cohen, "people will be paying us for access to the technology and use of the technology, probably with milestones for well-defined clinical events but modest or small royalties."

Collaborations are not likely to center on specific targets, again because of the nature of Acacia's platform.

"It's really not possible or practical to do therapeutic carve-outs," Cohen said, "because if you do genome-wide screening of chemicals [as Acacia is], you don't really know what the therapeutic indication is when you start."

In addition to its work with Lilly, the company has also joined forces with a consortium of academic labs to develop a full complement of 6,000 systematic mutant yeast, an effort expected to take two to three years.

A knockout is a mutated organism with exactly one gene missing. By observing the differences between a knockout organism and a normal one, scientists can figure out the function of the gene and how loss of its expressed product affects the expression of other genes.

The consortium will test individually each mutant to see how loss of the gene in question affects the expression of every other gene. In addition to the systematic project, Acacia will produce specific knockout yeast for collaborative research projects.

Acacia may also at some point adapt its platform to the orders-of-magnitude larger genomic sequences of other creatures, including mammals, when the data become available.

"In the long run," Cohen said, "this technology can be used to characterize large-scale combinatorial libraries, predict side effects prior to clinical trials and resurrect drugs that have failed during clinical trials." *