Washington Editor

In a move aimed at narrowing Genome Therapeutics Corp.'s focus on building its drug discovery and development business, the company Tuesday said it intends to transfer its genomic sequencing service business to Agencourt Bioscience Corp., a young, privately held company.

Genome Therapeutics, a Waltham, Mass.-based company looking to file its first new drug application next year for Ramoplanin in the prevention of bloodstream infections caused by vancomycin-resistant enterococci (VRE), will sell its GenomeVision Services business to Agencourt, of Beverly, Mass.

Neither company would release specific details of the financial arrangements. However, Steven Rauscher, president and CEO of Genome Therapeutics, told BioWorld Today that his firm will receive a percentage of revenues from commercial and government customers transferred to Agencourt for two years. Rauscher said Genome Therapeutics also holds an undisclosed equity stake in Agencourt.

Meanwhile, Rauscher said the transfer is not expected to change Genome Therapeutics' financial guidance for 2003, which includes a projected net loss of $20 million to $25 million. (Genome Therapeutics will retain the PathoGenome database because the company uses it in its own drug discovery activities.)

The GenomeVision business accounted for about 50 percent ($10.9 million at the end of the third quarter) of Genome Therapeutics' annual revenues. Nevertheless, Rauscher said the sale frees up the company to work on projects such as Ramoplanin, also the subject of a Phase II trial for the treatment of Clostridium difficile-associated diarrhea.

"We do believe that the combination of Agencourt and our GenomeVision services business will create the clear industry leader," Rauscher said.

And representatives of Agencourt feel the same.

"We're building a business to provide what we like to call discovery solutions to the pharmaceutical and biotech marketplace, and this is just another step in our natural progression to provide top-end services and quality products to our customers," said Brian McKernan, president and CEO of Agencourt. "GenomeVision has been around for many years and they've got a good name in the marketplace and they've got some great people who will move over to our shop. The combination of the two services will produce a better result in the end."

Founded in July 2000, Agencourt currently employs 46 people. The company's Discovery Solutions is a suite of genomic and functional genomic services including high-throughput sequencing, SAGE sequencing, SNP discovery and genotyping. Agencourt also provides purification products and services based on its Solid Phase Reversible Immobilization technology, which has been used to sequence more than 20 billion base pairs of DNA, or more than one-third of the human genome, the company said in a prepared statement.

About 60 of Genome Therapeutics' 155 employees are associated with GenomeVision Services. When asked whether staff will be retained, McKernan said Agencourt continues to work through those issues. "Obviously, we are looking to take the star employees to fill some of the roles that we have open at Agencourt. I don't have an exact figure right now, but obviously when you put two organizations together and you are in the same business, there's a lot of duplicate activity going on so we don't necessarily need to bring on a lot of people."

However, as part of the agreement, Lynn Doucette-Stamm, GenomeVision's vice president and general manager, will join Agencourt in the newly created position of vice president, business development.

Genome Therapeutics' stock (NASDAQ:GENE) closed Tuesday at $1.59, down 3 cents.