The Upjohn Co. became the second major customer for IncytePharmaceuticals Inc.'s genomics data base, agreeing Thursday to payIncyte at least $20 million.

Of the total, $10 million will be paid over three years for access tothe genomics data base, called LIFESEQ, an Upjohn official toldBioWorld. Another $10.08 million is in equity payments to Incyte(AMEX:IPI). Upjohn purchased 791,000 shares at a premium priceof $12.75 apiece, giving the Kalamazoo, Mich., company about 10percent ownership of Incyte's 7.9 million shares outstanding.Incyte's stock was up 8.5 percent, or 91 cents, Thursday, closing at$11.63 per share.

In June, Pfizer Inc. agreed to pay Incyte $25 million over three yearsfor the same non-exclusive rights. Pfizer is paying $15.75 million inresearch funding and data base access charges, and paid $9 millionfor 710,000 shares of Incyte stock.

Roy Whitfield, president and CEO of Palo Alto, Calif.-based Incyte,told BioWorld the cost to Pfizer was more because Pfizer also madea larger initial commitment to another Incyte data base called theSatellite Database, under which Pfizer can send an unspecifiednumber of cells and tissues of special interest to Incyte forsequencing, analysis and correlation to biological phenomena.Upjohn will pay extra for each use of the Satellite Database.

"The price is actually going up, as the data base grows," Whitfieldsaid. "It's doubled in size since we did the deal with Pfizer," growingfrom about 100,000 entries of cDNA sequences to 235,000. "We'reup to 32,000 unique genes. Our goal is to have a million sequences[total] in 1995.

"You can't get any more fundamental than knowing which genes areturned on or off in all cells or tissues of the human body," Whitfieldsaid. "We've called this the `operating software' for medicalresearch. We're convinced this data base is going to be on everymedical researcher's desk going into the next century. The challengefor Incyte is to capture the business."

Whitfield said Incyte currently is in discussions with 15 of theworld's top 20 pharmaceutical companies.

Robert Gorman, Upjohn's vice president for discovery research, in aprepared statement, said, "We expect access to Incyte's transcriptimaging technology to be the cornerstone of our growingbiotechnology presence, and to have an immediate impact onexisting Upjohn discovery programs by providing our scientists withextensive, highly specialized information about molecularpharmacology and clinical pathology at the gene expression level."

Upjohn's financial communications manager, John Lambrechts, toldBioWorld this deal helps the company's push into biotechnology.

"We already have substantial core expertise in gene cloning, proteinexpression and purification, and transgenic animal models ofdisease," Lambrechts said. "This expands our core technologies bygaining access to important gene sequencing information."

LIFESEQ, recently trademarked by Incyte, stands for Library ofInformation for Expressed Sequences.

Whitfield said Upjohn's equity investment substantially increasedIncyte's cash position, taking it from about $15 million to $25million. The company also has $25 million or so in commitmentscoming from Pfizer and Upjohn over the next three years.

Upjohn (NYSE:UPJ) stock was down 75 cents Thursday, closing$31.38. n

-- Jim Shrine

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