By Charles Craig

SmithKline Beecham plc has forged collaborations with Cadus Pharmaceuticals Corp., a functional genomics firm, and Evotec Biosystems GmbH, a drug screening company, to find small molecule compounds that affect cellular activities triggered by specific signaling pathways, whose functions have yet to be defined.

Cadus, of Tarrytown, N.Y., said its agreement could be worth $68 million and is the company's largest drug development pact. Cadus' stock (NASDAQ:KDUS) soared 17 percent, closing Thursday at $17, a $2.50 increase.

Evotec, of Hamburg, Germany, said the SmithKline collaboration and a similar technology agreement announced Thursday with Novartis AG, of Basel, Switzerland, could pay the high throughput screening firm about $30 million.

The cell signaling pathways targeted by SmithKline are regulated by G protein-coupled receptors, which are responsible for transferring external signals into cells and which control most cell functions.

About 100 G protein-coupled receptors are known and are targets for many marketed drugs. However, thousands more G protein-coupled receptors remain uncharacterized.

Hundreds of others, called orphan receptors, have been discovered by worldwide efforts to identify human genes, but only their raw DNA sequences are known, not their functions.

SmithKline * through its own gene sequencing and data received from its genomics partner, Human Genome Sciences Inc., of Rockville, Md., * has full sequences for what it believes are orphan G protein-couple receptors.

The basis of SmithKline's work with Cadus will be discovering what cellular activities those receptors control and what other molecules make up the signaling pathways. The companies will work on an undisclosed set number of receptors.

The alliance with Evotec gives SmithKline access to technology to screen its combinatorial compound libraries for potential drug candidates that interfere or activate the receptors.

Evotec's high through-put screening system, called EVOscreen, also would be used to identify compounds for other genetic targets. The company said EVOscreen's fluorescence detection capabilities are "sensitive enough to detect single molecules within cells" and measure binding properties of drug candidates with targets, such as receptors.

Cadus has developed a method for modifying yeast cells with human genes to express orphan receptors and analyze their functions. The hybrid human-yeast cells also are used to evaluate the binding capabilities of potential drug candidates and how they affect the biological activities of the receptors.

Jennifer LaVin, Cadus' director of corporate communications and business strategy, said the SmithKline deal, in addition to being the company's most lucrative, represents a major move into functional genomics.

In two other collaborations with Bristol-Myers Squibb Co., of Princeton, N.J., and Solvay Group, of Brussels, Cadus is using its yeast-based technology to screen drugs against known G protein-coupled receptors. Those two deals are worth a potential $50 million each.

Cadus' agreement with SmithKline will pay a potential $43 million during the first five years. Cadus could receive up to $18 million in the first two years and more than half of that amount, or $10 million, would constitute an equity investment by SmithKline.

SmithKline also has agreed to pay another $25 million for the first extension of the five-year collaboration.

Financial details of Evotec's alliances with SmithKline and Novartis were not disclosed. *