Procept Inc. announced Thursday that it has entered into amajor alliance with Swiss-based Sandoz Pharma Ltd. ondeveloping small-molecule drugs to treat life-threateningimmune system disorders.

Sandoz will contribute $29 million to privately held Procept'scoffers. The money will go towards funding research programs,including license fees and milestone payments involvingProcept's small molecule compounds. "This is strictly a researchcollaboration," said Stanley Erck, Procept's president and chiefexecutive officer. "Sandoz is not taking an equity position."

The collaboration will involve joint marketing of allcommercialized products. Sandoz will receive European andAsian marketing rights, while both companies will sharemarketing rights in North America.

Procept's business activities are based on research by EllisReinherz, who is in charge of immunobiology at the DanaFarber Cancer Institute at Harvard Medical School. Reinherz'swork is centered on the role of the T cell receptor protein inregulating the immune system. Procept is pursuing the use ofsmall organic molecules to bind and inactivate these receptors.In fact, the company, based in Cambridge, Mass., has beenusing rational drug design to screen potential inhibitors of Tcell receptors, especially the CD4 and CD2 receptors. By comingup with drugs that are small organic molecules, Procept hopesto be able to gain advantages over protein-based drugs in theease and cost of manufacture as well as in the method ofdelivery (oral versus injectable).

Although Procept and Sandoz have targeted autoimmunediseases and organ transplantation rejection for drugdevelopment, they've not yet identified which area to tacklefirst. But given the fact that "Sandoz is a worldwide leader inpreventing organ transplant rejection (it manufactures thehighly successful drug cyclosporin), I suspect that would be ourfirst target for drug development," Erck said.

Procept is still privately held; although it filed for an initialpublic offering (IPO) in late January, it never completed thatoffering due to inhospitable market conditions for biotechstocks. However, earlier that month, the company had raised$11 million in a private placement led by HarvardManagement. That financing "took the pressure off completingthe IPO" and allowed the company to focus its efforts oncorporate partnering, Erck said, and the timing of the alliancewith Sandoz is "superb."

Sandoz is Procept's second major corporate partner. Procept hasan ongoing relationship with Bristol-Myers Squibb Co. (BMS),which dates from 1990 and was originally planned as a five-year, $10 million collaboration on developing products to treatdiabetes. A year and a half ago, BMS added another million tothe deal, Erck told BioWorld. In the past four years, "we'vemade real progress in understanding T-cell antigen receptors.Now the program is focused on identifying the receptors thatare the causative factors in diabetes, and finding a drug toblock those receptors," he explained.

-- Jennifer Van Brunt Senior Editor

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