Pharmacopeia Inc. signed its fifth collaboration with apharmaceutical firm that wants to use the Princeton, N.J., company'scombinatorial chemistry to find new drug candidates.

The agreement with Daiichi Pharmaceutical Co. Ltd., of Osaka,Japan, is worth $22 million to Pharmacopeia through an equityinvestment, licensing fees and research funds. A portion of thefinancing _ less than half _ will be paid up front with the balanceof the money distributed over the next three years. Pharmacopeia alsowill receive milestone payments from Daiichi based on drugdevelopment progress and royalties.

In the collaboration, Pharmacopeia will use its combinatorialchemistry and screening technology to develop drug candidates forseveral molecular targets. Neither the targets nor the diseases weredisclosed. Pharmacopeia also will put together libraries of chemicalcompounds for other Daiichi research programs.

Lewis Shuster, Pharmacopeia's chief financial officer, said thealliance with Daiichi is similar to his company's other fourpharmaceutical partnerships.

Pharmacopeia's stock (NASDAQ:PCOP) closed Monday at $27, up$2, an 8 percent jump.

The deal is Pharmacopeia's first with a Japanese drug maker andsecond collaboration in two months. In early February 1996 thecombinatorial chemistry firm signed an agreement with Bayer AG, ofLeverkusen, Germany, for more than $20 million plus milestonepayments and royalties. The diseases targeted in the research werenot identified.

Pharmacopeia also has collaborations with Schering-Plough Corp., ofMadison, N.J., for cancer and asthma drugs, and Berlex LaboratoriesInc., of Richmond, Calif., for multiple sclerosis compounds. Berlex isa subsidiary of Schering AG, of Berlin, Germany.

Pharmcopeia's other alliance is with Sandoz Ltd., of Basel,Switzerland, to generate compounds for the pharmaceutical firm'sfour main drug discovery areas _ cancer, organ transplant rejection,skin disorders and central nervous system diseases.

In early March 1996, Sandoz and Ciba-Geigy Ltd., also of Basel, saidthey intended to merge in a stock swap valued at about $30 billion. n

-- Charles Craig

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