Top-tier biotech companies are increasingly in a position toform partnerships with their younger counterparts. But whilethe pool of potential partners is growing, it's still small.

"We've seen over the past year or so much more play by thebiotech companies," said Jay Kranzler, president and chiefexecutive of San Diego-based Cytel Corp. "Amgen, GeneticsInstitute, Genentech and Chiron all have balance sheets whichcan support investments in smaller biotech companies. Thattrend will continue. Even small companies like us have becomemore aggressive on the licensing front, and we acquiredGlycogen a couple of months ago."

Most active on this front has been Genentech Inc., which lastJanuary initiated a strategy of obtaining technology incollaboration with development-stage companies. Over theyear, the South San Francisco, Calif., company signed majordeals with four of its biotech brethren: Glycomed Inc., IncytePharmaceuticals Inc., Telios Pharmaceuticals Inc. and XenovaLtd., plus a one-year agreement with NeoRx Corp.

G. Kirk Raab, president and CEO of Genentech, told BioWorldearlier this year that such collaborations will become more andmore the norm as both sides see that there are synergies fromthese relationships that haven't been present in partnershipsbetween pharmaceutical and biotech companies.

"We've proved that point by already getting milestonepayments -- one six months early," said Glycomed Inc.'spresident Alan Timms.

Glycomed of Alameda, Calif., went directly to Genentech in itssearch for a partner because of the perceived synergiesbetween Glycomed, with its ability to recognize carbohydrateligands and Genentech, with its expertise in cloning andmanipulating proteins.

"We held preliminary discussions with a number of potentialcorporate partners among the major pharmaceuticalcompanies," Timms said, "but few if any brought us the otherhalf of the equation."

Industry leader Amgen Inc. is also on the lookout for partners,though it hasn't been as active as Genentech. "Two years ago atour annual meeting, (CEO) Gordon Binder said this is somethingthe company is going to look at," said Amgen spokesman MarkBrand. "You always look. We do not suffer from the 'notinvented here' syndrome." The Thousand Oaks, Calif., companyhas one corporate partnership dating from August 1990 withRegeneron Pharmaceuticals Inc. to develop brain-derivedneurotrophic factor and neurotrophin-3.

Gensia Pharmaceuticals Inc., which raised $178 million throughpublic offerings this year, is talking to a couple of companiesabout potential partnerships. "I would imagine we will do oneor two of those in the next year," said David Hale, Gensia'spresident and chief executive. "The real issue is it absolutelyhas to be right in the middle of what we are doing."

But the universe of biotech companies with the wherewithal tofund deals is still very small, said Garen Bohlen, executive vicepresident at Genetics Institute Inc. of Cambridge, Mass.

Among the well-heeled biotech companies, Synergen Inc. andGenetics Institute are not actively looking for partners. "But wewould consider very specific situations that fit into ourcorporate strategy," said Synergen President and CEO Jon Saxe.

GI is even more focused on aggressively developing its internalpipeline. "Something external would have to be an outstandingopportunity," said Bohlen.

-- Karen Bernstein BioWorld Staff Last of three parts

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