Microcide Pharmaceuticals Inc., a privately-heldcompany that is focusing on the development of novelantibiotics, said Wednesday it is collaborating withOrtho-McNeil Pharma-ceuticals and R.W. JohnsonPharmaceutical Research Institute to develop and marketseveral new antibiotic therapies.

Ortho-McNeil and the Institute are affiliates of Johnson &Johnson, of New Brunswick, N.J.

"This agreement is the first in a series of partnershipagreements that will be announced over the next severalmonths," said Jim Rurka, president and CEO of MountainView, Calif.-based Microcide. "This agreement will bringus financial stability so that we do not have to return tothe venture capital market for financing. It will alsopermit us to make a public offering when we choose to,"he told BioWorld Today.

He noted that the company's cash was "negligible" at thetime of the agreement.

Microcide was founded in late 1992 with $18 million inventure capital. It is developing new genetic andgenomics approaches to solve the growing problem ofstrains of bacteria that are increasingly resistant toantibiotic therapy. While the Ortho-McNeil deal istargeted to develop new classes of antibiotic agents aimedat gram-positive bacteria products, used primarily to treatnosocomial infections, the company's technology extendsto the development of several novel antibiotics. Allresearch is in the pre-clinical phase.

The deal is worth at least $8 million to Microcide througha $3 million up-front cash license and a $5 million equityinvestment by Johnson & Johnson Development Corp.,the investment subsidiary of Johnson & Johnson.

But Rurka said the collaboration is worth considerablymore. "I cannot put a total dollar figure on the dealbecause how Microcide is compensated for the marketingof products sold in North America is still a matter ofnegotiation." Ortho-McNeill will hold worldwidemarketing rights to the products subject to the agreement.

Under terms of the collaboration, the Institute will fundcertain Microcide research. The agreement may beextended for an additional one-year period. Milestonepayments will also be made.

While Microcide intends to partner with a number ofcollaborators it also will retain rights to several productlines. "We will partner some of our more advancedtechnology as well as our basic discovery technology. ButI also expect that some Microcide technology will remainprivately held so that we can take these products to thepublic marketplace at the appropriate time," Rurka said.

Microcide is focusing on the $25 billion antibioticsmarket which is second only to cardiovasculartherapeutics. The company has targeted therapies forwhich there is a specific unmet clinical need rather thanbroad spectrum therapy.

According to Microcide, these products will beparticularly useful in clinical infections caused by virulentpathogens not adequately treated by existing antibioticsand those nosocomial infections caused by antibioticresistant organisms. Microcide's initial products areaimed at a limited number of antibiotic-resistantmicroorganisms, including vancomycin-resistantenterococci, penicillin-resistant pneumococci andPseudomonas. n

-- Michele L. Robinson Washington Editor

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