Genetics Institute Inc. and American Home Products Corp. saidTuesday that they have formed a collaboration to discover anddevelop new small molecule drugs.

GI (NASDAQ:GENIZ) of Cambridge, Mass., will receive fundingover the next several years, and the companies will sharemarketing rights for any resulting products. Further termsweren't disclosed. AHP owns 60 percent of GI.

In the first phase, the companies will focus on blocking cellularadhesion proteins with small molecules. The proteins play animportant role in the movement of white blood cells out of theblood stream into surrounding tissue. Drugs could potentiallytreat disorders such as rheumatoid arthritis, asthma, organtransplant rejection and adult respiratory distress syndrome.

The targets of a second phase weren't disclosed.

GI spokeswoman Melinda Lindquist said the deal doesn't affectthe company's agreement with Syntex Corp. That collaborationis looking for small molecules that inhibit inflammation byblocking cytolic Phospholipase A2 (cPLA2), which plays animportant role in initiating the inflammatory cascade.

GI shares were down 75 cents to $25.50. -- KB

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