Sandoz Ltd. entered a research collaboration withPharmacopeia Inc. to use the latter's combinatorialchemistry to generate potential therapeutic compoundsfor the Swiss pharmaceutical maker's four main drugdiscovery areas _ cancer, organ transplant rejection,central nervous system diseases and skin disorders.

Terms of the Pharmacopeia agreement were notdisclosed. It is the second partnership for Sandoz with abiotechnology company launched by the drugmanufacturer through a venture capital fund establishedfour years ago. The fund is an investment partnershipstarted by Sandoz, of Basel, Switzerland, and AvalonVentures, of San Diego.

Larry Bock, general partner of Avalon Ventures, said theventure capital fund has founded nine companies since1991 with less than $10 million in seed financing. Thefledgling firms have raised more than $500 million incapital in four years and they employ more than 400scientists.

Bock said many pharmaceutical companies invest in largeventure capital partnerships, but never collaborate withthe start-up firms. Avalon Medical Partners, he added,was established to back biotechnology companies thathad technology Sandoz could tap for its drug discoveryefforts. (See BioWorld Financial Watch, Feb. 14, 1994.)

In addition to Pharmacopeia, of Princeton, N.J., Sandozhas a collaboration with Argonaut Technologies Inc., ofSan Carlos, Calif., which makes instruments for organicsynthesis of therapeutic compounds.

Other companies started by Avalon Medical Partners are:Sequana Therapeutics Inc. and Aurora Biosciences Inc.,both of La Jolla, Calif.; Idun Pharmaceuticals Inc. andNeurocrine Biosciences Inc., both of San Diego;Microcide Pharmaceuticals Inc., of Mountain View,Calif.; and Onyx Pharmaceuticals Inc., of Richmond,Calif.

Sequana, a genomics company, is the only one of thegroup whose stock trades publicly. The others areprivately held.

Avalon Medical Partners is a limited partnership and thedollar amount of Sandoz's equity investment in eachcompany has varied.

In the Pharmacopeia collaboration, some funding is forcombinatorial chemistry work being done now by thecompany. Pharmacopeia also will create libraries ofcompounds for Sandoz to screen for activity against itsspecific disease targets. Neither Sandoz norPharmacopeia would say if the current partnershipincludes an additional equity purchase.

The pharmaceutical collaboration is the third majorpartnership for Pharmacopeia since it was founded in1993. In December 1994, the company signed a potential$75 million deal with Schering-Plough Corp., ofMadison, N.J. and two months later agreed to a $20million alliance with Berlex Laboratories Inc., of Wayne,N.J. Part of the funding from both partners involvedequity investments.

Berlex is a subsidiary of Germany-based Schering AGand the research partnership focuses on multiplesclerosis. The Schering-Plough collaboration involvesgenerating compounds with activity against specificmolecular targets involved in cancer and asthma.Pharmacopeia also is creating small libraries ofcompounds for Schering-Plough to screen against otherdisease mechanisms. n

-- Charles Craig

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