DNX Corp. and Cephalon Inc. said Monday that they haveformalized an ongoing collaboration to develop transgenicanimal models that exhibit the amyloid plaque depositsassociated with Alzheimer's disease.

Under the agreement, Cephalon (NASDAQ:CEPH) of WestChester, Pa., is providing gene constructs that have beenengineered based on the sequence of the amyloid precursorgene, mutants of the gene and beta amyloid. Princeton, N.J.-based DNX is developing animal models using its DNAmicroinjection technology.

The two companies began work in October and have developed50 transgenic founder mice incorporating a number of differentgene constructs, said Jack Lief, Cephalon vice president ofcorporate development.

"The collaboration saves each of us years of time and millionsof dollars," said Paul Schmitt, president and chief executive atDNX (NASDAQ:DNXX).

"What Cephalon has done is work with mutations of amyloidplaque precursor genes to accelerate the generation ofplaques," Schmitt said.

DNX, through its Pharmakon Research International subsidiary,will retain the right to use the animal models to provide testingand screening services. Cephalon will receive a portion of therevenues from the testing and screening activity.

Cephalon is collaborating with Schering-Plough Corp. to developdrugs to treat Alzheimer's and other neurodegenerativediseases. The Alzheimer's research is focused on developmentof chymotrypsin-like protease (clipsin) inhibitors. "We havesome compounds we're ready to test," Lief said.

Cephalon shares rose 75 cents to $13.75. DNX gained 50 centsto $9.25.

Other companies developing Alzheimer's animal models includeScios Inc., formerly California Biotechnology Inc., and AthenaNeurosciences Inc. Researchers working in collaboration withYamanouchi Pharmaceutical Co. last week retracted findingspublished in December in Nature that they had developed ananimal model for the disease. -- Karen Bernstein

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