With more potential drug leads than they can handle, Human GenomeSciences Inc. and its corporate partner SmithKline Beecham plc aremaking their gene sequence data bases accessible to rivalpharmaceutical firms in three deals initially valued at more than $140million over five years.

William Haseltine, chairman and CEP of Human Genome Sciences,said the agreements with Philadelphia-based Schering-Plough Corp.,French drug maker Synthelabo S.A., and the German pharmaceuticalfirm Merck KGaA change the traditional approach to developingtherapeutics.

"This represents a new paradigm for drug discovery in that a group ofpharmaceutical firms agree to share fundamental research data andshare marketing of developed products," Haseltine said. "Everybodyhas equal access to the genomic information."

Haseltine described the agreements as "co-opetition" meaning thecompanies will both cooperate and compete in the development ofsmall-molecule drugs based on potential disease targets isolated fromthe discovery of human genes.

During the past three years SmithKline, of London, has paid $125million to Human Genome Sciences, of Rockville, Md., for firstrights to develop drugs from gene sequences. In broadening access tothe data, SmithKline can begin recouping its investment oninformation that is still years away from yielding marketable drugs.

The deals also give Human Genome Sciences a method for boostingits profit from the research. Haseltine said the DNA data basescontain partial sequences for nearly all the estimated 100,000 genesin the human genome.

In announcing the agreements Tuesday, Human Genome Sciencesand SmithKline also further amended their exclusive 1993partnership, which was first broadened last year when SmithKlinegranted Takeda Chemical Industries Ltd., of Osaka, Japan, asublicense to the DNA sequence data bases. The Takedacollaboration was valued at $35 million.

In their revised relationship, Human Genome Sciences andSmithKline now will share equally in license fees and milestonepayments from partners. In addition, Human Genome Sciences willget research payments and royalties while SmithKline can obtainmarketing rights to products.

The two companies, Haseltine said, expect to sign at least one othermajor alliance similar to those with Schering-Plough, Synthelabo, ofMontrouge, France, and Merck, of Darmstadt, Germany.

The Schering-Plough deal is worth $55 million. Synthelabo hascommitted $35 million. And Merck, which is expected to finalizeterms later this month of an agreement first announced in April 1996,has agreed to pay $50 million.

Haseltine said the more than $140 million represented in the threedeals does not include milestone payments or royalty projections.The funds are license fees and research payments that have beencommitted and will be paid over five years. Of that total, HumanGenome Sciences will receive more than $90 million.

Much More Than Just Data Base Access

"These are not just data base access deals," Haseltine said. "They arereal research and development collaborations." The $300 millionworth of research developed by Human Genome Sciences andSmithKline is part of the agreements, he added.

That research includes gene sequences _ which are raw data _ aswell as technology for understanding their biology and relationship todiseases.

Synthelabo and Merck will work with SmithKline on drugdevelopment and marketing while Schering-Plough will collaboratewith both SmithKline and Human Genome Sciences on drug projects.

Haseltine said another important revision for Human GenomeSciences in its alliance with SmithKline is his company now hasindependent rights to develop or license therapeutic proteins. Theoriginal agreement gave SmithKline first rights to those drugcandidates.

Haseltine added Human Genome Sciences is conducting animalstudies on six potential therapeutic proteins for cancer,hematopoiesis, wound healing, viruses and inflammatory disorders.

Human Genome Sciences also negotiated a separate agreementTuesday with Schering-Plough for development of gene therapiesbased on the genomics data. Financial terms were not disclosed.Schering-Plough paid for a non-exclusive license to the genesequence data bases and an option to buy exclusive rights to genesselected for a gene therapy product. It also will make milestone androyalty payments to Human Genome Sciences.

In the 1993 deal with SmithKline, Human Genome Sciences retainedrights to its DNA information for use in gene therapy and antisensedrug development.

Commercial Potential For Genomics Is Vast

Discussing the breadth of the multiple agreements Tuesday, Haseltinesaid three years ago some drug makers doubted the potential forcommercial applications of genomics.

"This technology, he said, "has proved to be so powerful, it hasgenerated many more opportunities for drugs than we or SmithKlinecan develop on our own."

Reijer Lenstra, analyst for Smith Barney in New York, praised thecollaborations as a means of advancing drug development.

Lenstra said Incyte Pharmaceuticals Inc., of Palo Alto, Calif.,developed early on in its research a business strategy to sell non-exclusive access to its gene sequence and gene expression technologybecause of the enormous amount of data being generated.

To date Incyte has nine pharmaceutical clients who have committedmore than $160 million for subscriptions to its genomics information.Unlike Human Genome Sciences, Incyte is not using the genetic datafor its own drug development.

Human Genome Sciences' stock (NASDAQ:HGSI) closed Tuesdayat $35.12, down 12 cents. SmithKline ended the day up 50 cents to$55.50. Schering-Plough was off 25 cents to $62.37. n

-- Charles Craig

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