Belgium-based Solvay Group is taking a $100 millionleap into U.S. biotechnology by signing two five-yearagreements with Arqule Inc., a combinatorial chemistrycompany, and Cadus Pharmaceutical Corp., whose drugdiscovery technology focuses on regulating signaltransduction pathways in cells.

Solvay, a chemical and pharmaceutical company, plans touse Arqule's approach to generating potential therapeuticcompounds with Cadus' expertise in cellular receptors toestablish a drug discovery program targeting centralnervous system, gastrointestinal and cardiovasculardiseases.

"This is a big step for us," said Dominique Clerbois, aspokeswoman for Solvay. "We want to move faster intopharmaceutical development."

Solvay's Netherlands subsidiary, Solvay Duphar B.V.,made an up-front equity investment in both privately heldU.S. companies, each of which could receive up to $50million in their collaborations with the pharmaceuticalfirm.

Cadus received $10 million, giving Solvay a 9.5 percentinterest in the Tarrytown, N.Y., company. Solvay also hasagreed to purchase an additional equity stake in Caduswhen it goes public.

Arqule, of Medford, Mass., received $7 million, but thepercentage of ownership interest was not disclosed.

The balance of funds in Solvay's $100 millioncommitment will be distributed to the two companiesover five years in the form of research financing andmilestone payments.

Michele Strauss, Arqule's director of operations, said theSolvay deal is her company's third collaboration thisyear. The other two are with Sweden-based PharmaciaBiotech for a potential $30 million and AbbottLaboratories, of Abbott Park, Ill., for up to $35 million.

In describing Arqule's combinatorial chemistrytechniques, the company said it develops non-peptide,non-nucleotide organic building blocks from which it cangenerate libraries of molecular compounds. Thetechnology is applicable not only to drug discovery, butalso to other areas, such as drug delivery, separations anddiagnostics, where molecular recognition agents are used.

Cadus' technology focuses on three different receptorsystems which regulate signal transduction pathwaysinvolved in cellular physiology.

Jeremy Levin, Cadus' president and CEO, described hisagreement with Solvay as both a research and drugdiscovery partnership. Solvay has rights to drugs thatemerge from the collaboration for central nervous system,cardiovascular and gastrointestinal diseases andendocrine and metabolic disorders. Cadus, which willreceive royalties from Solvay, retained rights to drugs forcancer and inflammatory and immunological diseases.

The agreement with Solvay, Levin said, is broader thanthe $35 million research collaboration Cadus signed inJuly 1994 with New York-based Bristol-Myers SquibbCo.

Solvay's annual revenues in chemicals andpharmaceuticals total $8.2 billion a year. The company'sbiggest pharmaceutical product is Luvox, which is sold inEurope and Canada for treatment of depression and in theU.S. for obsessive-compulsive disorder. n

-- Charles Craig

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