Hybridon Inc., which registered for an initial public offering (IPO) inNovember 1995, Wednesday entered into a potential long-termantisense drug development alliance with G.D. Searle & Co. thatcould be worth more than $200 million to Hybridon.

The agreement covers use of Hybridon's antisense technology todevelop compounds for eight molecular targets identified by Searle,of Skokie, Ill., as regulators of immune system responses.

Hybridon, of Worcester, Mass., also granted Searle an option toexpand the collaboration through formation of a joint venturebetween the two companies.

Antisense drug development involves using oligonucleotides to bindto messenger RNA and prevent the production of disease-associatedproteins.

Searle officials, in signing a letter of intent on the agreement, saidthey will purchase $10 million in stock in Hybridon's IPO, which isexpected to become effective next week.

Kristin Fayre, public affairs manager for Searle, said antisense drugdevelopment is a new research area for the pharmaceutical firm,which is a subsidiary of Monsanto Co., of St. Louis.

The molecular targets were not disclosed, but Fayre said rheumatoidarthritis and transplant rejection are two priorities in Searle's drugdevelopment program.

In addition to making a $10 million equity investment related to thefirst compound in the collaboration, Searle agreed to pay Hybridon atleast 18 months of research and development funding.

According to papers Hybridon filed with the Securities and ExchangeCommission, Searle would pay up to an additional $130 million infees, research payments and equity investments related to six othermolecular targets and another $26 million for the eighth target, whichis associated with cancer. The pharmaceutical firm also agreed to pay$10 million in milestone payments during development of the drugs.

If the joint venture were formed to expand the alliance, Searle wouldcontribute $50 million, making the collaboration worth a potential$226 million to Hybridon.

Hybridon's contribution to the joint venture also would be $50million, but the cash amount would be reduced based on the value ofits technology.

In addition, Hybridon retains all rights to manufacturing the antisensedrugs.

The Searle collaboration does not involve any compounds Hybridoncurrently is developing. The company's lead product is GEM 91, anantisense oligonucleotide in clinical trials in the U.S. and France forAIDS. Hybridon also has five other compounds in preclinicaldevelopment.

Hybridon, formed in 1990, registered for its IPO in early November1995. The company expects to sell 5 million shares between $9 and$11 per share. Lehman Brothers, of New York, and Paribas CapitalMarkets, of London, are underwriting the offering and haveoverallotment options for another 750,000 shares.

Half the shares are being sold in the U.S. and Canada and the otherhalf are being offered overseas.

Hybridon has other corporate collaborations with Roche HoldingsLtd., of Basel, Switzerland; Medtronic Inc., of Minneapolis; andPharmacia Biotech AB, of Uppsala, Sweden, a subsidiary ofPharmacia & Upjohn Co., of Kalamazoo, Mich.

The Hybridon-Searle deal is the first significant big pharma-biotechcollaboration of 1996. According to BioWorld Financial Watch, lastyear there were 165 new deals valued at $3.19 billion (but only 55percent of the collaborations revealed total value). n

-- Charles Craig

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