Glycomed Inc. announced Monday that it will receive up to $24million in an extended collaboration with Genentech Inc.

Genentech is raising its equity in the carbohydrate drugdiscovery company to 6.2 percent from the 3.6 percent stake itobtained in a 1991 deal, its first partnership to obtaincomplementary technology from a development-stagecompany.

Glycomed, called a leader in its area by analyst David Stone ofCowen & Co., approached Genentech of South San Francisco,Calif., about sharing more technology after striking acarbohydrate R&D agreement in 1992 with the AlbertaResearch Council (ARC).

The ARC program and the original Genentech deal both concerninhibition of cellular adhesion, which is often mediated bycarbohydrates, said Bill Anderson, chief financial officer ofGlycomed. The two programs also have interrelated targets ininflammatory, immune and infectious diseases.

Anderson told BioWorld that it made sense for Glycomed ofAlameda, Calif., to integrate the programs because "it was fairlyobvious that putting the two programs together would result ina stronger overall program."

Genentech (NYSE:GNE) spokeswoman Laura Leber agreed thatthe combined endeavor has the potential to achieve more thanthe companies might separately accomplish in researching celladhesion inhibitors, which may protect against tissue damageby keeping neutrophils from leaving the bloodstream.

The companies agreed that Glycomed has substantiallyachieved milestones outlined in the first three-year agreement,which called for a $3.5 million equity investment, Andersonsaid. In addition, Glycomed (NASDAQ:GLYC) will receive another$2.85 million in milestone and research payments shortly aftersigning.

Research support is extended through 1997 and includes up to$10 million in support payments. Glycomed will also earn newmilestone payments as compounds enter the clinic.

Glycomed's lead compound, GM1998, is expected to beginclinical trials to treat adult respiratory distress syndrome(ARDS) during the next 12 months.

Glycomed will have company as other drugs targeting celladhesion also reach the clinic in the next year, said CarolWerther of Cowen & Co. She noted programs in this area atRepligen Corp., Protein Design Labs Inc., Icos Corp., Cytel Corp.and Scios Nova.

"There's incredible competition and in some cases, not a clearpatent position," she said. But, she added, "Genentech does notsink money into projects they don't think are worthwhile."

Genentech has agreed to let Glycomed develop three drugs inareas that had been the larger partner's realm. The categoriesare ARDS and similar shock-related diseases, peritonitis andrelated infectious diseases and post-infectious diseases, andorgan transplant rejection and related inflammatorycomplications.

Genentech can opt for joint ownership interest in the drugcandidates, which would provide Glycomed with furtherfinancial assistance during development.

The areas were selected because they represent a concentratedmarket, require less-costly clinical trials in acute-care patients,and had encouraging preliminary animal data, Anderson said.

Previously, Glycomed had supplied compounds for Genentechto use in pharmacology and animal research. Now Genetech willhave access to ARC compounds, rights, technology and skills,such as the scale-up manufacture of some compounds,Anderson said.

In exchange, the companies agree to share cross-licensing androyalties in a way he said is "better for both."

Glycomed's stock was up 13 cents a share on Monday, closing at$6.75; Genentech picked up 88 cents a share to close at $43.63.

-- Nancy Garcia Associate Editor

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