BioWorld International Correspondent

PARIS GenOway SA signed a nonexclusive agreement with the French pharmaceutical company Servier for the in vivo validation of a number of therapeutic gene targets.

At the same time, Lyon-based GenOway is engaged in another funding round to raise EUR6 million (US$5.4 million) from a group of European venture capital funds and financial institutions.

The deal provides for GenOway to validate gene targets identified by Servier using its proprietary target validation platform to predict the therapeutic potential of those targets for treating human disease. The financial terms of the agreement were not disclosed, nor were the therapeutic areas of interest. The one-year deal may be renewed annually.

Servier, of Paris, is the largest privately owned pharmaceutical company in France, and the country’s third biggest in terms of worldwide sales. The main pathologies in which it specializes are diabetes, cardiovascular disease, neuropsychiatric disorders, cancer and bone and joint diseases.

Founded in 1999, GenOway provides in vivo and in vitro research models to customers, saying that its functional genomics technology provides more reliable predictive results regarding the therapeutic potential of drug targets because it is “closer to human physiology” than other technologies. GenOway has developed both animal models, using transgenic mice, and in vitro models, using embryonic stem cell differentiation, to study genetically engineered cells.

The company has almost completed the development of a new and patented homologous recombination technology called Rapid Knock Out, which it will start making available to customers in a few months. GenOway Chief Financial Officer Gilles de Poncins told BioWorld International that with the technology “we will be able to do a knock-in in 12 months instead of 18 months” a knock-in being the extraction of a gene from an animal and its replacement by a modified, humanized gene.

De Poncins said GenOway has contracts for its in vivo and in vitro target validation services with some 30 companies in 13 countries, including big names such as Johnson & Johnson, of New Brunswick, N.J.; GlaxoSmithKline, of London; Aventis, of Strasbourg; Novartis, of Basel, Switzerland; and BioMérieux-Pierre Fabre, of Paris. Its current contracts total about EUR3.5 million, which explains why de Poncins expects the company’s revenues to jump to EUR3.5 million to EUR3.8 million this year from EUR700,000 in 2001.

The company is expected to continue losing money for another two years, however. De Poncins said it would achieve break-even, excluding research and development spending, at the end of this year and overall break-even at the end of 2004. He said he was confident that the funding round under way would yield the EUR6 million GenOway is seeking, adding that it would be completed within a few months. Hitherto, the company has raised a total of EUR2.5 million in three stages, the last of which dates to December 2000. De Poncins did not rule out the possibility of another funding round before the company moves into profit, and hinted at an IPO in 2005.