Incyte Pharmaceuticals Inc., seeking to boost the value of itsmicrobial gene sequence data base for drug discovery, entered analliance with Scriptgen Pharmaceuticals Inc. to generate informationon the function of selected bacterial and fungal genes.

Michael Palfreyman, vice president of research and development forMedford, Mass.-based Scriptgen, said the companies will targetgenes considered essential for the microbes' survival and others usedby deleterious bugs to adapt to the hostile environment of theirhuman hosts.

Scriptgen will use its high-throughput technology for knocking outgenes in the microbes and regrowing the organisms to determine thefunction of the deleted genetic material.

"If we knock out a gene and the bacteria doesn't grow, it's anessential gene," Palfreyman said. Microbes' adaptive genes, headded, are analyzed by deleting them and growing the organismsunder stressful conditions, such as those encountered during a humanimmune system attack, to see how the bacteria or fungi respond.

Dayna Wheeler, spokeswoman for Palo Alto, Calif.-based Incyte,said the information on gene function will be integrated with thecompany's microbial gene sequence data bases, called PathoSeq, foruse by subscribers in their drug discovery efforts.

Zeneca Ltd. was the first company to sign up for access to thePathoSeq data bases in June. The London-based drug maker also isone of 10 pharmaceutical companies paying for access to Incyte'score data base of human gene sequences, called Lifeseq (Library ofInformation for Expressed Sequences).

Wheeler did not identify the microbes being sequenced by Incyte. Inthe collaboration with Scriptgen, the companies will attempt toanalyze the function of as many as 100 genes from various bacterialand fungal genomes. Financial details of the alliance were notdisclosed.

Palfreyman said the work initially will focus on pathogens mostresistant to current antibiotics. Scriptgen will have access to thePathoSeq data bases and the information on gene function for its ownanti-bacterial and anti-fungal drug discovery programs. The companyis developing drug candidates to regulate gene expression.

Incyte was one of the first companies to establish itself as a supplierof genetic data for drug discovery. The alliance with Scriptgen is thelatest move in Incyte's strategy to enhance the value of its variousgene sequence data bases with technology to analyze gene functionand speed formation of therapeutic compounds.

Incyte sells non-exclusive access to its data bases and is targeting thetop 50 drug makers as potential customers. In June, the company saidthe first nine subscribers had committed $160 million for access tothe genomic data bases.

In addition to subscription fees, customers pay for either non-exclusive or exclusive licenses for specific genes. Incyte also receivesmilestone payments and royalties for products developed.

Incyte's stock (NASDAQ:INCY) closed Tuesday at $46.50, down$1.375 on the news. The stock gained $0.50 Wednesday to close at$47. n

-- Charles Craig

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