Signal Pharmaceuticals Inc., a privately held company developingsmall molecule compounds to neutralize disease-causing genes insidecells, entered its first major collaboration with Japanese drug makerTanabe Seiyaku Co. Ltd. for up to $46 million.

The four-year agreement between Signal, of San Diego, and Tanabe,of Osaka, covers discovery of drugs to treat osteoporosis andinflammatory diseases, such as arthritis and asthma.

Tanabe made an equity investment, paid license fees, will provideresearch support and contribute milestone payments in return forexclusive rights to develop and market compounds in Asia. Signalcould receive as much as $46 million.

Alan Lewis, Signal's president, said Tanabe will conduct preclinicaland clinical development in Asia.

Signal retained rights elsewhere in the world to drugs from thecollaboration. Lewis said his company is in discussions with otherpharmaceutical firms for partnerships focused not only oninflammatory diseases and osteoporosis, but also on the company'sother two major drug discovery programs _ viral and neurologicaldiseases.

Signal has made the most progress on identifying compounds fortreating inflammatory diseases, particularly rheumatoid arthritis.

"We have a lead molecule that has gone through proof of concept inanimal models of arthritis and organ transplant," Lewis said.

As for osteoporosis, the company's research is in the early stage."We have identified hits in primary assays and hope to convert thoseinto leads."

Signal's technology is based on its expertise with intracellularsignaling enzymes that activate transcription factors, which in turntrigger gene expression. The goal is to find compounds that block thesignals and shutdown genes before they have a chance to producetheir disease-causing proteins.

In inflammatory diseases, transcription factor targets include thoseregulating production of cytokines and cell adhesion molecules.

In osteoporosis, transcription factors to be blocked regulateproduction of interleukin-6 (IL-6), a cytokine involved in bonedeterioration. Signal's researchers said estrogen normally suppressesIL-6 and loss of the hormone during menopause leads to osteoporosisin women.

A transcription factor believed to play a pivotal role in bothinflammatory diseases and osteoporosis is nuclear factor kappa-B,otherwise known as NF-KB, which is linked to stimulation ofnumerous cytokines.

Signal scientists said they have identified a family of kinases, orenzymes, that activate NF-KB as well as numerous othertranscription factors.

In the agreement with Tanabe, both companies will contribute smallmolecule compounds to the research and Signal will provide theproprietary signaling enzyme targets.

Signal, formed in 1993, has raised a total of $18 million in venturecapital financing. n

-- Charles Craig

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