Genome Therapeutics Corp. on Thursday signed itssecond major collaboration related to use of its genomicstechnology for identifying agents useful against disease-causing pathogens.

The Waltham, Mass., company is collaborating withSchering-Plough Corp. in a deal worth up to $43.5million. The companies will attempt to discover anti-infective agents with activity against drug-resistantorganisms.

In September Genome Therapeutics aligned with AstraAB, of Sweden, in a collaboration capitalizing onGenome Therapeutics' sequencing of the Helicobacterpylori genome. That deal is worth up to $22 million.

"The majority of our commercial activity this year hasbeen to put together these programs to pioneer a newniche in pathogen genomics," said John Richard, vicepresident, business development, for GenomeTherapeutics. "A major goal in 1996 is to develop thesame profile for our human genomics research."

Genome Therapeutics uses gene mapping, DNAsequencing and computational molecular biology. It alsohas an exclusive license to computer-assisted, high-throughput multiplex sequencing technology developed atHarvard Medical School.

The first step in the collaboration with Schering-Plough isto identify novel bacteria targets to attack. Validation ofthe targets and development of assays will follow. Thefinal step will be screening and compound identification.Schering-Plough would develop resulting compounds andpay royalties on sales. Genome Therpaeutics retainsdiagnostic rights.

Schering-Plough, of Madison, N.J., has an option tocollaborate for four years on this project. Specific termswere not revealed, but license fees, research andmilestone payments to Genome Therapeutics areexpected to be at least $6 million in the first year and upto $10 million, depending on progress. The $43.5 millionfigure would be reached if all milestones are reached andthe agreement goes the full four years.

With Astra, Genome Therapeutics is expected to realizemore than $8 million in the first year. Neither Astra norSchering-Plough took an equity position in GenomeTherapeutics.

The opportunity with Schering-Plough is a result of theresistance many organisms now have to currentantibiotics. Schering-Plough hopes to use its naturalproduct and compound libraries in the new assays to findantibiotics with new mechanisms of action, so theywould be active against organisms resistant to currentantibiotics. The collaborators believe target organismswould develop resistance to novel drugs slower than theywould to new drugs that are modified forms of existingantibiotics.

Ronald Asinari, a spokesman for Schering-Plough, saidthe new research collaboration "complements our internalefforts in anti-infectives and provides a new pathway tothe discovery and development of novel anti-infectiveagents."

"We reviewed the genomics field," Asinari said, "andbelieve Genome Therapeutics' capabilities and expertisein this field represent cutting-edge technology that offersthe potential for the discovery of anti-infective agentswith activity against drug-resistant organisms."

Last year Genome Therapeutics completed sequencing ofthe entire genome of H. pylori, a bacterium believedresponsible for gastritis and many peptic ulcers. In 1994the company also was awarded a three-year $10 milliongrant from the National Institutes of Health to furtherdevelop the multiplex sequencing technology licensedfrom Harvard.

Revenues from grants and contracts helped GenomeTherapeutics realize a profit for its most recent fiscalyear, which ended Aug. 31, 1995. The company reportednet income of $585,000 on revenues of $11.2 million. Itscash position was $9 million.

The company's stock, which isn't followed closely byanalysts, closed Thursday at $8.63, down 75 cents. n

-- Jim Shrine

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