By Frances Bishopp

Allelix Pharmaceuticals Inc. has formed a three-year alliance with Aurora Biosciences Corp. and a one-year joint venture with Pharm-Eco Laboratories Inc. in two moves that call for up to a $51 million investment by Allelix in the U.S. companies.

Allelix will pay Aurora, of La Jolla, Calif., up to $47 million for access to Aurora's high-throughput screening capability. It is a plan, Jerry Ormiston, manager of investor relations at Allelix, told BioWorld Today, designed to shorten the time for Allelix drug candidates to reach the market, and to reduce Allelix's capital outlay to develop similar screening capability and the R&D cost of developing preclinical candidates.

The joint venture with Pharm-Eco, of Lexington, Mass., allows both companies to develop two families of neuropharmaceutical compounds currently owned by Pharm-Eco. Allelix, of Toronto, will invest $4.6 million in a combination of cash and Allelix common shares over a one-year period to purchase 60.5 percent interest in the venture and to fund preclinical development of pharmaceutical compounds in two therapeutic areas: cognitive enhancement and cocaine addiction treatment.

In the Aurora alliance, Allelix will provide funding and license fees to use Aurora's fluorescent screening technology for certain molecular targets. Allelix will pay Aurora milestone payments associated with lead compounds identified and successfully developed and royalties on commercial sales of any products identified from the screens.

"The alliance is currently three years," Ormiston said, "although if a product were to be identified or a hit made from a screen, the process, of course, would be much longer."

Allelix, which began its biotech business in the early 1980s, discovers and develops pharmaceutical products by applying chemical and biological approaches to disease targets identified through biotechnology. The company has focused its research in the areas of the central nervous system and hormone- and gene-related diseases.

Aurora is a privately held company which focuses on novel, mammalian cell-screens for drug discovery. Its fluorescent bioassay technology is designed to rapidly develop molecular targets, conventional or genomic, into functional screens to identify therapeutic lead compounds.

Aurora's second platform technology is the Ultra High Throughput Screening System, which is designed to test hundreds of thousands of compounds per day to identify potential lead compounds.

"This particular collaboration is designed to develop the technology and adapt it to our needs," Ormiston said. "Our needs are primarily in the neuropharmaceutical area. Aurora will bring proprietary technology on how to best measure fine compounds that are active.

"Once the assays are developed, we as a company will access compounds from other sources and screen those compounds with the assay looking for hits. Once hits are developed, Allelix has the ability to further develop those along a classic pathway," Ormiston said.

Under terms of the Pharm-Eco deal, proportionate ownership of the joint venture will be adjusted over time to reflect cash contributions by Allelix and Pharm-Eco to the development program, Linda Willis, president of finance at Allelix, told BioWorld Today. The investment will be subject to execution of a definitive agreement by the parties and to regulatory approval.

Willis, who said the company has chosen not to reveal details about the two products at this time, except to say they are a series of compounds directed to an indication, said, "the $4.6 million represents the initial investment, but doesn't mean that that's the limit to develop them."

"This money is essentially for the first year's development," Willis said. "Because we own it, we can put up money when we need to. It's like making an equity investment."

Pharm-Eco is a full-service drug synthesis and chemical services company that performs a variety of laboratory process scale-up and manufacturing tasks under strict confidence, including development of processes and synthesis routes for new medicinal products, and validating bulk pharmaceutical processes.

One of Allelix's lead products in Phase II clinical trials, PTH (recombinant or genetically engineered human Parathyroid Hormone) is being developed for osteoporosis. Another product, ALX-0600, is in preclinical testing for short bowel syndrome and other gastrointestinal disorders. Two other products, ALX-0625 and ALX-0646, are in preclinical evaluation for the treatment of migraine headaches.

Allelix currently is in partnership with Eli Lilly & Co., of Indianapolis, Ind., to develop drugs to treat stroke, other neurodegenerative diseases and eating disorders; and with Hoechst Marion Roussel, of Kansas City, Mo., for the treatment of schizophrenia.

On Jan. 20, 1997, Allelix reported that it had decided not to pursue further development of ALX40-4C, its peptide molecule for treatment of HIV and CMV infection, stating that continuing Phase I/II clinical trials at higher doses could not be justified on the basis of possible benefits to patients and the healthcare system.

Allelix was established a pharmaceutical division in 1987 and went public in 1991. *

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