Started four years ago to attack the growing problem of bacterialresistance to overused antibiotics, Microcide Pharmaceuticals Inc.,with three corporate collaborations, is heading into the equitymarkets with an initial public offering (IPO) of 2.5 million shares.

In registering for the IPO, Microcide, of Mountain View, Calif., didnot identify a price range for the stock sale. The company, whichreported a 1995 net loss of $3.5 million, had $8.5 million in cash atthe end of last year.

Microcide has collaborations with Johnson & Johnson, of NewBrunswick, N.J., Daiichi Pharmaceutical Co. Ltd., of Tokyo, andPfizer Inc., of New York. The three partners have paid Microcidenearly $20 million in equity investments, license fees and researchfunds and would contribute another $36 million toward research forthe initial drug development programs.

Microcide has two approaches in battling drug-resistant bacteria. Thecompany is developing new antibiotics that target specific bacterialresistance mechanisms and small molecules that target bacterial genesessential for keeping microbes alive.

Gram-positive bacteria, such as staphylococci, enterococci andstreptococci, and gram-negative bacteria, such as pseudomonas, areantibiotic resistant targets of Microcide's drug discovery programs.Together those microbes are responsible for more than 40 percent ofhospital-acquired infections.

Microcide's most recent collaboration, negotiated with Pfizer thisyear, focuses on bacterial genetics. Microcide is attempting toidentify genes activated by the bacteria not only to stay alive, but alsothose that enable the microbes to grow and become virulent.

For example, in staphylococcus aureus, Microcide reported lastNovember its scientists discovered about 50 of the approximately200 essential genes used by the bacterium to live in vitro. Themicrobe has about 2,000 genes in its complete genome. The goal ofthe research is to find small molecules that inhibit the genes'functions and kill the bug.

Microcide's agreements with Johnson & Johnson and Daiichi weresigned within a month of each other last fall.

The Johnson & Johnson collaboration is with the drug maker'ssubsidiary, Ortho Pharmaceutical Corp., also of New Brunswick. Thedeal includes a focus on developing new drugs for gram-positivebacteria that have become resistant to penicillin and other beta-lactamantibiotics. A drug candidate is expected to enter clinical trials in1997.

Johnson & Johnson paid Microcide $8 million up front, including a$5 million equity investment. The company would receive additionalresearch and milestone payments for each product developed.

The alliance with Daiichi targets gram-negative bacteria that resistdrugs using an efflux pump mechanism, which enables the microbesto rid themselves of antibiotics before they have a chance to work.Initially the collaboration will focus on developing an efflux pump-inhibiting compound to be used with Daiichi's quinolone antibiotics.A compound is expected to be ready for clinical trials by mid-1997.

In the Daiichi agreement, Microcide will be paid $10 million inresearch funding over three years and will get additional paymentsfor each drug candidate.

In addition to seeking collaborations for its technology, Microcideintends to develop some products itself. n

-- Charles Craig

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