SAN FANCISCO -- Shares of Gensia Pharmaceuticals Inc. soared$8.25 on Wednesday to $67.25 after the company announced ithas signed a four-year agreement with Sandoz PharmaceuticalCorp. to develop and market new drugs to treat type IIdiabetes.

The agreement could be worth $22 million to Gensia(NASDAQ:GNSA) if one drug is developed, and more if otherdrugs result.

The collaboration combines the San Diego company's purinetechnology for inhibiting the production of glucose withSandoz's preclinical models for diabetes and its experience indrug development, said David Hale, president, chairman andCEO of Gensia. Sandoz has initiated a large type II, or adult-onset, diabetes program, Hale said.

Gensia will find and develop small molecules that inhibit anenzyme in the gluconeogenic pathway. That pathway isresponsible for the formation of glucose. Gensia is targeting apurine site on the enzyme and has candidate compounds in theresearch phase.

The company will receive R&D funding and milestonepayments, plus roylaties. It also has an option to co-promotedrugs in the United States and Canada.

Sandoz will fund the basic research and may also contributecompounds for evaluation. The East Hanover, N.J., company willhave an exclusive worldwide license to drugs discovered underthe agreement and will be responsible for preclinicaldevelopment, clinical trials, regulatory filings, manufacturingand marketing.

The terms more closely resemble earlier biotech-pharmaceutical company agreements than more recent deals inwhich biotech companies have retained far greater rights.

Hale, in San Francisco for the Hambrecht & Quist 10th AnnualLife Sciences Conference, told BioWorld that Gensia chose aroyalty deal because diabetes is outside its centralcardiovascular focus.

-- Karen Bernstein BioWorld Staff

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