Applied Biosystems Inc. (ABI) on Monday announced that ithas spun off its therapeutics subsidiary, Lynx TherapeuticsInc., which was formed in July to develop therapeutics basedon its synthetic DNA technologies.

ABI of Foster City, Calif., will invest $10 million and contributemanufacturing technology and intellectual property to Lynx inexchange for 10 million shares of Lynx series A preferredstock, 5 million shares of common stock and an option topurchase 2 million more common shares. Chiron Corp. ofEmeryville, Calif., will invest $1.5 million in exchange for 1.5million preferred shares.

Chiron also paid Lynx $1.5 million in a viral drug developmentcollaboration in exchange for marketing rights and an option topurchase an additional 1.5 million shares of Lynx commonstock.

According to Sam Eletr, Lynx's chief executive officer, thecollaboration with Chiron will focus on the development ofantisense therapeutics aimed at three viral targets: hepatitis B,hepatitis C and HIV.

"We're capitalizing on Chiron's strong intellectual propertyposition in the hepatitis B and hepatitis C fields -- areas whichwe couldn't have tackled alone," Eletr said.

Under the collaboration, Lynx will be responsible for drugsynthesis and manufacture based on synthetic DNA chemistrytechnology, and Chiron will contribute its molecular biologyexpertise to research and development.

Lynx will retain exclusive manufacturing rights, and Chiron willhave exclusive marketing rights for the three diseases.

The collaboration "will enable us to play a significant role in theviral field while allowing Lynx to focus the bulk of its resourceson several cancer projects," Eletr said.

"Lynx has a leading technology in the antisense field which webelieve is a promising approach to the development of anti-viral drugs," said William J. Rutter, Chiron's chairman.

Lynx is an outgrowth of ABI's former therapeutics group,which had been working on DNA chemistries to develop drugsbased on antisense compounds for about five years.

Antisense uses oligonucleotides that are complementary to andhybridize with RNA to prevent the synthesis of disease-causingproteins inside cells. Antisense is thought to be useful indiseases involving protein synthesis, such as cancers, geneticdeficiencies, cardiovascular disorders and bacterial infections.

Lynx is about to begin Phase I trials in a research collaborationwith the University of Nebraska Medical Center, using P-53, aDNA regulating protein, to treat acute myelogenous leukemia(AML) for which it recently received the first-ever FDAinvestigational new drug approval for a systemic treatmentsystem.

Lynx is also using c-myb and c-abl oligonucleotides, proto-oncogenes that were the center of a licensing dispute last weekbetween Temple University of Philadelphia and Raggio-Italgene SPA of Italy, to explore cancers, including colorectalcancer and melanoma. Eletr would not elaborate on Lynx'stargets that will use c-abl.

Eletr told BioWorld that Lynx is in active discussions with otherpotential collaborative partners.

Applied Biosystems stock (NASDAQ:ABIO) closed up $2 a shareon Monday to $17. Chiron (NASDAQ:CHIR) dropped 50 cents ashare to $46.50.

-- Michelle Slade Associate Editor

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