German drug makers traditionally have forged biotechnologyalliances abroad to avoid strong anti-genetic engineering sentimentsin their country, but BASF AG is challenging that wisdom bybringing U.S.-based Lynx Therapeutics Inc. to Heidelberg for a rareproject _ forming a German biotechnology start-up company.

"This is the first joint venture of this sort in Germany," said Lynxpresident David Martin, referring to his Hayward, Calif., company'salliance with BASF, of Ludwigshafen, to form BASF-LYNXBioscience AG. (See BioWorld Today, Oct. 24, p. 1.)

The $66 million joint venture, to be located in Heidelberg, not onlywill serve as a genomics drug discovery arm for BASF using Lynx'sgene expression analysis, but also has the equally ambitious goal ofserving as a launching point for a fledgling biotechnology industry inGermany.

Anti-technology pressure from organizations, such as the GreenParty, and a lack of entrepreneurial incentives _ from both thegovernment and financial community _ have combined to create a"risk aversive" environment in Germany among would-bebiotechnology professionals, Martin observed.

To help overcome those attitudes, BASF-LYNX Bioscience willimplement an American-like incentive program to help attract the 60-person staff sought for the new company.

Fifteen percent of the equity in BASF-LYNX will be set aside foremployees, said Martin, who recalled stock plans helped balancerisks taken by scientists and company managers in the early days ofthe computer high-tech and biotechnology revolutions in California'sSilicon Valley and the San Francisco Bay Area.

BASF and the German government, which is relaxing regulations thathindered start-ups, "are trying to build a biotechnology presence inthe Neckar valley," Martin said. The BASF-Lynx joint venture willbe located on the campus of the University of Heidelberg near wherethe Neckar and Rhine Rivers meet.

The Lynx collaboration also is viewed as an attempt by BASF tocatch up to other German pharmaceutical companies, such as BayerAG, of Leverkusen, and Boehringer Mannheim GmbH, of nearbyMannheim, that have been aggressive in pursing biotechnologyalliances in the U.S.

But Martin said there was another reason for BASF to team up withLynx. He and BASF's head of biotechnology, Alfred Bach, workedtogether at Genentech Inc., of South San Francisco. When Lynxlearned BASF was looking for opportunities in biotechnology, nopreliminary introductions were needed and negotiations proceededstraight to business.

BASF-LYNX Bioscience, which will be 51 percent owned by BASFand 49 percent owned by Lynx, will be funded by the German drugmaker for five years. The joint venture's staff will work on threemajor projects using Lynx's technology.

The first, which will dominate more than half of the resources, willuse Lynx's massively parallel signature sequencing (MPSS) to locategenetic targets for drugs to treat epilepsy.

Lynx's MPSS is a technology for quickly assessing gene expressionchanges in tissues by cloning, identifying and quantifying as many as1 million messenger RNA (mRNA) molecules in a matter of days.

In addition to drug discovery, BASF will use the technology to testthe safety of chemicals, such as drugs, insecticides and industrialproducts, on human cells and to determine if knowledge of geneexpression patterns can boost the effectiveness of microorganismsused in fermentation of amino acids and vitamins.

The companies said the cash and technology investment in BASF-LYNX Bioscience will total $66 million for the first five years,meaning BASF is committing about $34 million.

In addition, BASF will pay Lynx another $19 million over two yearsin a separate drug discovery agreement to use its MPSS to analyzegene expression in cell and tissue samples provided by the drugmaker.

The service collaboration, Martin said, is similar to the first MPSScollaboration Lynx entered with Hoechst Marion Roussel, ofFrankfurt, Germany, in October 1995.

Both Hoechst and BASF also have collaborations with IncytePharmaceuticals Inc., of Palo Alto, Calif., for access to Incyte's database of human gene sequences.

Using Lynx's technology, which is still under development, Martinsaid the drug makers will be able to determine gene expressionchanges in diseased tissues and use that information with data fromIncyte to identify specific genes of interest. n

-- Charles Craig

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