By Debbie Strickland

Antibiotic-resistant bacteria are creating a hot market for genomics companies' data bases, with big pharma firms paying millions for data whose analysis may expose the bugs' weaknesses.

The latest deal involves Waltham, Mass.-based Genome Therapeutics Corp. (GTC) and Bayer AG, of Leverkusen, Germany, which is paying an undisclosed amount for nonexclusive access to GTC's proprietary PathoGenome data base.

"We've been planning this for some months," said Robert Hennessey, president, chairman and chief executive officer of GTC. "We pioneered microbial and fungal genetics, and I feel we have the most comprehensive microbial database."

Designed for use at the client site, the database combines GTC's genomics information with that available from public-domain sources, using the company's bioinformatics software. The company describes it as "a tool for researchers to search for new genes among multiple pathogens and cross-reference genomic information."

The multi-year agreement provides for annual subscription fees "in the low-to-modest seven-digit area," plus royalties in the "low single-digit area" on any related, Bayer-developed small molecules, said Hennessey.

Analysts estimated the annual subscription fee lies between $1 million and $3 million. Matthew Murray, an analyst with Lehman Brothers in New York cited the $3 million per year fee in last year's "comparable" agreement between Human Genome Sciences, of Rockville, Md., and Pharmacia & Upjohn, of Kalamazoo, Mich.

Under the contract with Bayer, GTC retains all rights associated with the therapeutic, diagnostic and vaccine use of bacterial genes or gene products, with the hope that one or more of the subscribers will opt for a spin-off collaboration to develop such products.

The PathoGenome data base consists of genomic sequencings of Enterococcus faecium, Enterococcus faecalis, Streptococcus pneumoniae, and Staphylococcus epidermidis, plus several others not disclosed for competitive reasons.

"There are a total of about a dozen key infectious agents in PathoGenome," said Hennessey. "Some of them are very commercially relevant."

The company's goal over the next two years is to line up 10 subscribers and pursue drug-development deals with several of those.

Subscriptions alone could bring in $10 million to $20 million annually, and given the $25 billion to $30 billion market for antibiotics and antifungals, if some of GTC's anticipated pharmaceutical partnerships result in new drugs, the payoff could be annual revenues upwards of $100 million, said Hennessey.

But that's "still years away," the CEO stressed.

Murray called the GTC-Bayer agreement "a significant deal because it signifies that the PathoGenome data base generates interest from pharmaceutical companies, and therefore there could be many other deals of this same type."

With the subscription program, GTC now ranks among the "more diversified" of the genomics companies, said Sharon Seiler, an analyst with Oppenheimer & Co. in New York.

As one of the top three antibiotic companies worldwide, with more than $1 billion in annual antibiotic and antifungal sales, Bayer's endorsement of GTC's science is a powerful one, Seiler said.

Seiler rates GTC's stock a "buy," while Murray rates it a "venture buy." He said a nonventure rating will come when the company "moves towards an internal drug-discovery program." The company has existing collaborations with, among others, Astra AB, of Sodertalje, Sweden; Schering-Plough Corp., of Madison, N.J.; and Versicor Inc., a South San Francisco-based subsidiary of Sepracor Inc., Marlborough, Mass.

In 1995, the company sold exclusive access to its sequencing of the Helicobacter pylori genome to Astra for up to $22 million. H. pylori causes peptic ulcers and gastritis.

GTC's Schering-Plough agreements are also big ticket--one could provide up to $43.5 million for joint discovery of anti-infective agents against drug-resistant organisms and the second up to $67 million for using genomics technology to discover new therapeutics for treating asthma.

The company last year reported net income of $1.9 million on revenues of $21.3 million.

GTC's stock (NASDAQ: GENE) closed unchanged Monday at $7.75. *