By Mary Welch

In its biggest collaboration to date, GlycoDesign Inc. signed a deal worth up to $56 million with Seikagaku Corp. to identify small-molecule orally active Core 2 transferase inhibitors for the treatment of inflammation.

"It is our largest deal but it also is a large deal for a project at this stage of development," said Christian Frayssignes, the company's vice president of business development. "This is a very early-stage project. We will be selecting leads and Seikagaku will be able to select up to three active compounds."

The deal calls for Tokyo-based Seikagaku (SKK) to make a $2 million equity investment in GlycoDesign and pay $2 million each year during the three-year research collaboration. SKK purchased about 500,000 shares of stock at $4 per share, representing a stake of less than 1 percent in GlycoDesign, Frayssignes said.

SKK also has the option to exclusive worldwide rights on a compound-by-compound basis to license intellectual property covering compounds selected during the collaboration.

In addition, SKK will pay Toronto-based GlycoDesign $16 million in total milestone and success payments for each compound licensed and developed.

"There are payments for different achievements, but if a compound is taken through clinical trials and is approved, we get $16 million," he said. "We believe they really want to take more than one compound because there was a lot of discussions in the deal covering a lot of indications."

SKK does not have a marketing department, Frays signes said. "They are excellent in drug development and they do significant deals at the Phase III level. As part of the collaboration, Seikagaku has the right to sublicense the compounds. We will get the minimum amounts that would be due to us with Seikagaku, even if they sublicense the compounds. In certain cases, we would get more."

The two companies will form a team of about 10 to 12 researchers. The team will "work on various elements of our platform and will start with existing leads. Then we'll apply our medicinal chemistry and combinatorial chemistry knowledge to the program as well as those from our biology group," he said.

Two years into the project, Frayssignes believes SKK will select the compounds it wants to take to the clinic for development and commercialization.

Core 2 transferase plays a major role in the start of inflammation by creating a carbohydrate structure that ends in the sialylLewisx (sLex), which in turn is responsible for gathering white blood cells to the surface of the damaged tissue. This mobilization of leukocytes leads to the invasion of the damaged tissue, which eventually results in inflammation.

GlycoDesign's approach is to create an oral inhibitor of Core 2 transferase that will prevent the synthesis of sLex for extended periods of time, thus stopping the inflammation's progress. Its stated aim is to become the world's leader in glycobiology - the study of carbohydrate-containing molecules and their function in the body. GlycoDesign develops proprietary inhibitors of the enzymes responsible for making certain cell-surface carbohydrates involved in disease.

Its lead compound, GD0039, is in Canadian Phase II trials in renal cell carcinoma, head and neck cancer and 5-FU-resistant colorectal cancer, and in a Phase I/II trial in the U.S. as a chemoprotective agent in advanced breast cancer patients receiving combination chemotherapy. GD0039 is an orally administered inhibitor of the enzyme Golgi a-mannosidase II.

GlycoDesign recently purchased Vascular Therapeutics Inc., of Mountain View, Calif., a firm that specialized in glycotherapeutics for cardiovascular diseases. At the time of the acquisition, Vascular Therapeutics had three antithrombotic compounds in its pipeline, with two of them representing a new generation of low-molecular-weight heparin. (See BioWorld Today, Aug. 12, 1999, p. 1.)

"That is going well and we will soon be partnering one of their programs," Frayssignes said. "In addition, we are still in talks with acquiring other companies. We are in serious negotiations and hope to complete a deal in December. But it is not likely. There's always a few details to work out."