Pharmacopeia Inc., a combinatorial chemistry company, signed itsfourth drug discovery collaboration with Bayer AG for more than$20 million.

The alliance sent Pharmacopeia's stock (NASDAQ:PCOP) up 4percent Monday to $31.25, a $1.25 jump. Since the Princeton, N.J.-based company went public in December 1995 at $16 per share, itsstock has soared 95 percent.

In the deal with Bayer AG, of Leverkusen, Germany, Pharmacopeiawill use its combinatorial chemistry techniques to generate librariesof compounds for the pharmaceutical company to screen fortherapeutic activity.

In addition, Pharmacopeia and Bayer, whose U.S. offices are inPittsburgh, Pa., will collaborate on a drug discovery program for aspecific molecular target, whose identity was not disclosed.

Lewis Shuster, Pharmacopeia's chief financial officer, said Bayeragreed to make a $10 million equity investment and pay anther $10million in license fees and research funding. Bayer also will makeproduct development milestone payments and pay Pharmacopeiaroyalties.

In the drug discovery collaboration, Shuster said Pharmacopeia willdevelop compounds and screen them for activity against the chosentarget. Pharmacopeia also will conduct preclinical evaluation of acompound before handing it over to Bayer for clinical development.

Pharmacopeia calls its technology Encoded Combinatorial Librarieson Polymeric Support. The company has collaborations withSchering-Plough Corp., of Madison, N.J., for cancer and asthmadrugs and with Berlex Laboratories Inc., of Richmond, Calif., formultiple sclerosis compounds. Berlex is a subsidiary of Schering AG,of Berlin, Germany.

Pharmacopeia also has an alliance with Sandoz Ltd. to generatecompounds for the Basel, Switzerland-based pharmaceutical firm'sfour main drug discovery areas _ cancer, organ transplant rejection,central nervous system diseases and skin disorders. n

-- Charles Craig

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