SmithKline Beecham plc, which since 1993 has paid Human GenomeSciences Inc. $125 million for gene discovery information, isattempting to recoup some of that investment by contracting withGerman drug maker Merck KGaA for access to the DNA sequencedata.

The move by SmithKline and Human Genome Sciences is the first ofseveral expected deals to trade on the overwhelming accumulation ofgenetic information _ data not likely to yield new drugs for years.The agreements also will enable Human Genome Sciences to profitmore from its gene sequencing achievements.

The three-year old collaboration between SmithKline and HumanGenome Sciences gave the London-based pharmaceutical companyfirst rights to the latter's gene discovery data for drug development.Since then the Rockville, Md., genomics company estimates it hassequenced portions of 90 percent of the approximately 100,000human genes.

Human Genome Sciences CEO William Haseltine said Thursday thedecision to provide other drug makers with access to the genetic data,which includes biological information, stems from realizing "we havecreated more real opportunities for product development than anysingle pharmaceutical company can use."

In March 1995 SmithKline negotiated a sublicense granting TakedaChemical Industries Ltd., of Tokyo, access to the gene sequence databases in a deal worth about $35 million plus product developmentmilestone payments.

Haseltine said the proposed agreement with Merck, of Darmstadt,Germany, is not a sublicense to data granted by SmithKline. It wouldbe a licensing deal involving both SmithKline and Human GenomeSciences and the two companies will have to make "certainmodifications" to their existing collaboration before negotiations withMerck are completed.

Haseltine said both SmithKline and Human Genome Sciences willshare up-front licensing fees from Merck and milestone payments forproducts developed from the genetic data.

Human Genome Sciences also will receive research paymentsdirectly from Merck. SmithKline will collaborate with Merck ondrugs and share marketing rights. Human Genome Sciences willreceive royalties on those drugs from both pharmaceuticalcompanies.

A SmithKline spokesman declined to discuss terms of the Merckcollaboration or the changes to the agreement with Human GenomeSciences. Financial details of the Merck collaboration also were notdisclosed.

Haseltine said, "We anticipate this and other deals we may sign arelikely to cover more than half of our research and developmentexpenses over five years."

He added Merck will have access to gene sequence data andbiological information about the genes. "We are providing realproduct opportunities," Haseltine said, "not just access to databases."

Human Genome Sciences' stock (NASDAQ:HGSI) closed Thursdayat $41, up $1.75. SmithKline (NYSE:SBH) ended the day at $52.62,an increase of $2.25. n

-- Charles Craig

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