Synaptic Pharmaceutical Corp. has negotiated a two-year expansionof its serotonin-based drug discovery collaboration with Eli Lilly andCo. _ the third extension of a pharmaceutical company alliance infive months for Synaptic.

"It's a clean sweep," said Kathleen Mullinix, Synaptic's chairman,president and CEO, referring to commitments from Lilly and thecompany's other two major partners to continue drug discoverycollaborations.

Paramus, N.J.-based Synaptic, founded in 1987, bases its drugdiscovery research on identifying and cloning human receptors formodulation with small molecule drugs.

In June, Ciba-Geigy Ltd., of Basel, Switzerland, expanded its alliancewith Synaptic on neuropeptide Y receptors linked to obesity andcardiovascular diseases. And last month, Merck & Co., ofWhitehouse Station, N.J., agreed to extend its collaboration on aninhibitor of the alpha 1-a adrenergic neuroreceptor for treatment ofbenign prostatic hyperplasia, or enlarged prostate.

When Synaptic negotiated partnerships with the three drug makers inthe early 1990s, the fully integrated pharmaceutical companybusiness model was still practiced by many start-ups with visions ofbecoming the next Genentech Inc., or Amgen Inc.

Strategic alliances "now are becoming more popular," Mullinix said,as companies have witnessed the potentially devastatingconsequences of trying to survive expensive and risky drugdevelopment ventures on their own.

"It was always our belief that for little companies to compete, theyhad to develop a technology platform to partner with pharmaceuticalfirms," she said.

Extension of all three of the companies' major collaborations beyondthe terms of the original agreements, Mullinix added, demonstratesSynaptic has delivered on its business plan.

As of June 30, 1996, she noted Synaptic had $36 million in cash anda net annual burn rate of $6 million.

The company entered its collaboration with Lilly in 1991, licensingto the drug maker exclusive rights to serotonin, or 5-Hydroxytryptamine (5-HT), receptors discovered by Synapticresearchers for development of therapeutics for central nervoussystem diseases.

Serotonin is a neurotransmitter linked to diverse problems such asanxiety, depression, sexual dysfunction, gastrointestinal-relatedailments, migraine headaches and sleep disorders.

Mullinix said the company has identified seven of the 14 knownhuman serotonin receptors, has patents on four and has filed forownership of the others.

Only one of the four patented receptor subtypes, 5-HT4, has not beenlicensed to Lilly. That receptor is believed to be involved ingastrointestinal function and cognition.

Lilly and Synaptic have drug candidates targeting three serotoninreceptors to modulate levels of serotonin. The most advanced is inPhase I trials for migraine headaches. The two others target receptorsare linked to anxiety and depression.

The drug for migraines is an agonist to the receptor and is designedto boost levels of serotonin to counter the inflammatory cascade thatmay be responsible for the painful headaches.

"It's a highly specific compound," Mullinix said, "that does not haveadverse cardiovascular effects."

Imitrex, London-based Glaxo Wellcome plc's drug for migraines alsotargets serotonin receptors, but can cause cardiovascularcomplications.

Financial terms of Lilly's two-year partnership extension were notdisclosed. The pharmaceutical company will increase researchfunding to Synaptic, which also receives milestone payments androyalties on marketed products.

"This is a significant expansion of the size of the collaboration,"Mullinix said. In addition to more research funding, Lilly has strickenfrom the original agreement a provision allowing it to terminate thecollaboration with six months notice. That means, Mullinix observed,Lilly is committed to supporting Synaptic's serotonin programthrough Dec. 31, 1998.

Lilly has a major presence in the anti-depression drug market. Thecompany's biggest selling product, Prozac, is an inhibitor ofserotonin uptake and had sales in 1995 of $2 billion.

In the 1991 agreement with Synaptic, Lilly made a $2.5 millionequity investment and purchased another $2.5 million worth of stockwhen the company went public in December 1995. Lilly officials saidMonday they sold their approximately 5 percent interest in Synapticearlier this year.

Synaptic's alliance with Ciba was forged in 1994 for development ofdrugs targeting neuropeptide Y receptors. Researchers have found theneurotransmitter, NPY, is a potent feeding stimulator. Specific termsof the Ciba partnership extension in June were not disclosed. Cibaowns about 10 percent of Synaptic.

Merck, which has been working with Synaptic since 1993, agreed tocontinue its alliance at least another year. Both companies haveoptions to extend the agreement beyond 1997. Their drug for benignprostatic hyperplasia is in preclinical trials and is designed to preventurinary retention associated with enlarged prostate.

Synaptic's stock (NASDAQ:SNAP) closed Monday down $0.125 to$10.875. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.