Drug discovery company CombiChem Inc. and Sumitomo Pharmaceuticals Co. Ltd. have signed an agreement worth up to $17 million, which focuses on a molecular target that plays a fundamental role in rheumatoid and osteoarthritis.

Under terms of the agreement, CombiChem, of San Diego, will receive an up-front payment, research support and milestone payments. Sumitomo, of Osaka, Japan, has exclusive global rights to develop and market or sub-license products resulting from the collaboration.

The $17 million figure excludes royalties.

CombiChem works with partners in three ways: lead generation, the process employed for targets with no known leads; lead evolution, the process by which CombiChem generates hypotheses that explain available data, then matches the hypotheses against the virtual library and ultimately synthesizes alternative drug templates; and lead optimization, the method used to construct libraries around the partner's lead to improve it before identifying it as a drug development candidate.

The partnership with Sumitomo focuses on lead evolution, Karen Eastham, chief financial officer at CombiChem, told BioWorld Today. CombiChem's universal informer library will be used to generate hypotheses and launch the drug design cycle, Eastham said.

"Our lead evolution expertise is the key capability differentiating CombiChem from our competitors," Eastham said. "Traditionally, a combinatorial chemistry company is in business to make thousands of compounds. Our focus is more on our proprietary software that helps us identify potential compounds that could be effective," she said.

"We don't synthesize them all, we only synthesize those that look like they match the features we are looking for," Eastham said. "We have more of an emphasis on the software component," she added.

Privately held CombiChem has other corporate collaborations with Teigin Ltd., of Osaka, and Roche Bioscience Inc., of Palo Alto, Calif. — Frances Bishopp