Schering-Plough Corp. has agreed to pay privately heldPharmacopeia Inc. as much as $75 million for research using thebiotechnology company's combinatorial chemistry techniques indeveloping potential drugs for cancer and asthma.

The partnership with Schering-Plough, of Madison, N.J., is the firstbig pharmaceutical company deal completed by Pharmacopeia,which is located in Princeton, N.J., and was founded in 1993.

The agreement initially will pay Pharmacopeia $26 million over thenext two to three years and includes an equity investment andresearch and development financing.

Pharmacopeia chairman and CEO Joseph Mollica said the equityinvestment will give Schering-Plough a small ownership percentagein his company.

Schering-Plough also has agreed to additional payments of up to $49million based on achievement of particular milestones in the courseof the collaboration. In addition, Pharmacopeia would receiveroyalties on sales of any products.

The agreement focuses on developing potential small moleculecompounds that will target specific enzymes and receptors involvedin cancer and asthma. Mollica said the deal also represents the kindsof partnerships Pharmacopeia is seeking in order to take advantageof its combinatorial chemistry.

The technology accelerates the process of drug discovery bydesigning and synthesizing large quantities of small organicmolecules that can be screened for their medicinal effects.

A Schering-Plough spokesman said the collaboration withPharmacopeia is aimed at generating 100,000 small organicmolecules a year, from which the pharmaceutical company expectsto have the first potential therapeutic compound identified and readyfor laboratory testing by 1996.

Lewis Shuster, Pharmacopeia's chief financial officer, said hiscompany's approach to combinatorial chemistry differs from othersin the field in two ways; the development of a process of solid-phasesynthesis and the use of microscopic plastic beads to more easilyidentify the structure of the compounds.

Pharmacopeia's approach allows the company to create a library ofmore than 100,000 compounds attached to microscopic beads. Toidentify a particular compound's structure on one of the beads,researchers use a set of inert chemical tags that encode the series ofchemical reactions each bead has experienced. The tags are then readand the active ingredient is synthesized on a larger scale foradditional testing.

Traditional drug discovery methods usually involved two basicapproaches. A big pharmaceutical company might maintain aninventory of about 100,000 chemical compounds, which weresynthesized over the years and which they tested for therapeuticeffects as disease targets became known. It would also extractedchemical compounds from natural products, such as plants, andsynthesized them to determine their potential medicinal benefit.

With combinatorial chemistry, instead of synthesizing one moleculeat a time, researchers can make millions of chemical structures to bescreened for new drug candidates. n

-- Charles Craig

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