Albany Molecular Research Inc. is increasing the scope of its chemistry-based services through the addition of a natural products collection from Eli Lilly and Co. and, separately, the purchase of a privately held contract manufacturer.

AMRI entered a three-year natural products research collaboration with Lilly, an agreement focused on screening and lead identification that at the same time expands AMRI's drug discovery and development technologies to include high-throughput biological screening. Lilly will transfer to AMRI its natural products collection, natural product library and related databases. The Indianapolis-based company's collection includes microorganisms, plant samples, marine invertebrates and a library of more than 100,000 samples that was designed to accelerate drug discovery.

"The Lilly assets that we are taking possession of include an excellent oral-class library of compounds used for drug discovery," Dwight Baker, AMRI's senior director of natural product discovery and screening, told BioWorld Today. "We have a collection that is very similar to the Lilly assets, so this now gives us among the largest, if not the largest, natural products collection for use in preclinical discovery."

The Albany, N.Y.-based firm, which gains full ownership and exclusive worldwide rights to the collection, will screen samples from the Lilly collection, as well as those from its own natural product libraries, for activity against disease targets identified and provided by Lilly.

"There is a great deal of chemical diversity that comes from natural products that cannot be obtained through synthetic chemical processes," Baker said. "We are trying to take our chemical knowledge and extend it a little bit earlier in the drug discovery timetable to address this lead-finding area."

AMRI, which plans to fund the costs of building an expanded screening group within its existing research and development budget, will work to discover drug lead candidates against several Lilly targets. Lilly retains the option to contract with AMRI for further lead optimization, medicinal chemistry or scale-up of any active compounds.

For its efforts AMRI can receive milestone and royalty payments on compounds, based on meeting unspecified criteria. AMRI, which is involved in a number of screening deals with pharmaceutical and biotechnology partners, also retains the right to further develop compounds on which Lilly passes.

"We anticipate that with these resources, AMRI will be able to undertake additional collaborations," Baker said. "We have the opportunity to take those compounds that Lilly might not choose, do further research on them and most probably license them to a third party."

He said AMRI's internal research tends to be more technology-focused, aimed at increasing the company's capabilities to collaborate. The same can be said of its simultaneously announced acquisition. AMRI completed its buyout of Rensselaer, N.Y.-based Organichem Corp., a $29.9 million cash purchase for the remaining 25 percent. AMRI said it financed the acquisition through a new $65 million credit facility, replacing its previous $25 million line of credit.

"AMRI is expanding its technologies," David Albert, AMRI's director of communications, told BioWorld Today. "The relationship with Lilly expands our natural products technologies, on the earlier side of drug discovery, while the Organichem purchase is more on the later stage. It is more for commercial manufacturing of active pharmaceutical ingredients and intermediates."

A month ago AMRI exercised its conversion option with respect to $15 million of Organichem subordinated debentures, at the time increasing its ownership stake from 39.2 percent to 75 percent. Organichem was founded in 1999 through a management-led buyout of Nycomed Amersham plc in Rensselaer.

"Both transactions expand AMRI's technologies," Albert said. "An important component of our strategy is to leverage our technologies for the potential to create milestone and royalty opportunities."

AMRI's stock (NASDAQ:AMRI) fell 33 cents Thursday to close at $14.41.