Shaman Pharmaceuticals Inc. entered into a three-year collaborationwith Ono Pharmaceuticals Inc. to employ the former's ethnobotanicalapproach to drug discovery to develop a treatment for non-insulindependent diabetes mellitus.The multi-million dollar deal involves an up-front contribution,research funding and milestone payments for South San Francisco-based Shaman, but specific financial terms were not disclosed.The agreement with Ono, of Osaka, Japan, countered effects ofShaman's other announcement Friday; that it was delaying for threemonths the start of the second part of its Phase II trials of its leadproduct, Provir, which is being tested for treatment of respiratorysyncytial virus (RSV) in children.Lisa Conte, Shaman's president and CEO, said the delay will notaffect the company and is not an indication of Provir's performance.She said the first part of the Phase II was designed to examinebioavailability of the oral treatment, but analysis of the children'splasma and urine samples, which were stored frozen for three to 14months, was inconclusive concerning level of absorption of the drug.Conte said additional studies will be made to determine how freezingthe samples affected the analysis and how they can be handled toadequately test bioavailability.The second part of the Phase II study, scheduled to begin inSeptember, now is expected to start in January. Conte said the firstPhase II trial showed Provir was safe.Provir is an antiviral compound derived from a medicinal plant.Shaman's ethnobotanical approach to drug discovery involvesscreening tropical plants from Africa, Southeast Asia and LatinAmerican that have a history of medicinal use.In its research on diabetes, Conte said Shaman already has isolatedthree potential compounds from medicinal plants. Under the three-year agreement with Ono, Shaman will screen 100 plants annuallythat have shown medicinal value against diabetes symptoms.The deal gives Ono rights to manufacture and market a potentialdiabetes treatment in Japan, South Korea and Taiwan. Shaman retainsrights elsewhere in the world. Although financial terms were notreleased, Conte said if the deal covered worldwide rights, it wouldfund research costs for three years for the diabetes project and giveShaman, which has two years of operating cash, another year's worthof financing.Based on Shaman's financial figures, the company's burn rate is $16million a year and it is spending about $9 million a year on itsdiabetes program.Shaman's stock (NASDAQ:SHMN) closed Friday at $3.75, down 12cents. n

-- Charles Craig

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