N.V. Organon continued its recent push to increase its drug-discoveryefforts with a new collaboration with Signal Pharmaceuticals.

The companies said Friday they will use Signal's technologies toidentify and validate novel genes and develop small-molecule drugsin Organon's areas of interest. Organon will fund three years of workat Signal in addition to paying a license fee, milestones and salesroyalties.

Organon, an Oss, the Netherlands unit of Akzo Nobel, formedcombinatorial chemistry collaborations in the past two months withChiron Corp., of Emeryville, Calif., and Pharmacopeia Inc., ofPrinceton, N.J. Organon also signed a deal recently to applyRedwood City, Calif.-based Anergen Inc.'s AnergiX technology to apeptide Organon believes is involved in rheumatoid arthritis.

"There's a commitment at Organon to use those tools to increase ourtargets and improve our chances of drug discovery," said JohnVerhoeven, manager of the licensing department at Organon. "Hereyou see a series of deals that are part of a well-driven strategy."

Verhoeven said Organon, which also has university collaborations inplace, expects to form additional research-oriented relationships,though they may be outside the area of combinatorial chemistry."Innovation," he said, "has to be supported by researchcollaborations with third parties."

For privately held Signal, the Organon relationship represents itssecond major collaboration. The San Diego-based company did itsfirst deal with Tanabe Seiyaku Co. Ltd., of Osaka, Japan, in April1996. Signal can earn up to $46 million in that four-year alliancecovering discovery of drugs to treat osteoporosis and inflammatorydiseases. Signal retained rights outside of Asia. (See BioWorldToday, April 15, 1996, p. 1.)

Signal President Alan Lewis said a third collaboration is in the offing.

Signal's approach combines genomics, whole cell and biochemicalassays, a screening library and robotic-based high-throughputscreening and combinatorial chemistry. It focuses on discoveringsmall-molecule drugs that regulate gene expression. The idea is tofind drugs that target cell-signaling proteins in cells responsible forregulating genes and the production of disease-causing proteins.

With Organon the company intends to identify and validate novelgenes, then develop screening assays for Organon to identify small-molecule candidates. The collaboration will focus on drugs targetinggynecological, cardiovascular and neurological diseases.

The relationship came about in a unique way.

Lewis said Signal officials visited Organon in the spring of 1995 topitch its capabilities. Organon liked Signal's integrated drug-discovery technologies but wasn't interested in the initial programbecause it was outside of Organon's focus area, he said.

"They asked us to craft a program that fit in very nicely with theirresearch goals _ women's health and related diseases, centralnervous system and cardiovascular," Lewis said. "We pitched it fordirection A and it ended in direction B."

The companies didn't disclose specific terms but Lewis said it is notas large financially as the deal with Tanabe since there are fewertargets needing to be screened. He said Organon will fund theprogram in its entirety and Signal could earn its first milestonepayment in 12 to 18 months. There is no equity component.

Signal, formed in 1993, has raised about $18.5 million in two venturerounds of financing. Lewis said Signal expects to raise its visibility inthe coming months through additional deals and discussions withinvestment bankers before testing the public markets, perhaps in thefirst quarter of 1997.

"This is certainly a game plan we consider doable," Lewis said. "Butthe market might tell us otherwise." n

-- Jim Shrine

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