By Frances Bishopp

In July, Salt Lake City-based NPS Pharmaceuticals Inc. became the second company to join SIDDCO Inc. in the creation of a consortium that will apply combinatorial chemistry and miniaturized screening technologies to the rapid discovery of new drugs.

On June 30, 1997, a Japanese pharmaceutical company (currently unidentified) signed on with the SIDDCO consortium, which, according to Colin Dalton, executive vice president of SIDDCO, will continue to grow with the expected addition of two other pharmaceutical companies soon to be announced.

SIDDCO, incorporated last November and headquartered in Tucson, Ariz., is in the business of drug discovery, but with a different approach than other combinatorial chemistry companies operating today.

SIDDCO integrates new enabling technologies, such as combinatorial chemistry and miniaturized optical bioassay systems, into drug discovery programs for itself and its partners.

Combinatorial chemistry speeds up the drug discovery process by making extremely large numbers of new chemical entities, Dalton said, which then can be entered into biological screening.

Combinatorial chemistry coupled with miniaturized high-throughput screening is accepted as an important advance in the drug discovery process. Competitive advantage in the pharmaceutical industry is derived from the uniqueness and information content of bioassays and the speed at which compounds can be synthesized, tested and optimized into potential drug candidates.

SIDDCO, Dalton said, capitalizes on the fact that small pharmaceutical and biotechnology companies have a need for combinatorial chemistry and miniaturized high-throughput bioassays, but do not have the resources to mount a combinatorial chemistry program or recruit the necessary chemists.

Dalton explained that SIDDCO differs from other combinatorial chemistry companies in three ways: the method of financing, the way collaboration-management is integrated into the drug discovery programs of its clients, and the broadness of its technology.

Dalton said SIDDCO is financed entirely through its collaborations.

SIDDCO shares not only the technology with its partners, but each partner's mission, Dalton explained.

The SIDDCO consortium pools resources to finance the development of combinatorial chemistry by SIDDCO. The resulting technology — reaction databases, informatics, automation and chemistry know-how — is shared with consortium partners such as NPS and the Japanese company.

At the same time, SIDDCO provides each partner with a team of medicinal chemists to design and synthesize libraries of compounds and optimize lead drug candidates to clinical candidate status.

Access to cutting-edge chemistry is very expensive business and requires approximately 40 people to do the combinatorial chemistry, Dalton said. "We have provided a mechanism whereby we can do this by pooling resources," Dalton said.

Each partner receives a greater than four-fold financial "ramp-up" of its research funding to collectively provide a "critical mass" of scientists.

Partners have direct management participation in the consortium at the executive and research level and benefit from technology transfer as well as discovery of clinical candidates.

The consortium eventually will have six members, seven counting SIDDCO, Dalton said.

The initial financing is done through the consortium, Dalton said. Members of the consortium share the development activities, and libraries are made specifically for the participating companies.

"Compounds identified from SIDDCO libraries are the partner's property," Dalton said. "There is no further lien on those properties, no royalties. The chemistry and information used in constructing libraries is a shared property. The consortium members can use the technology for their own purpose."

The next phase of SIDDCO's business plan is to form "swift optimization teams" (SWOT), which will be available to other pharmaceutical companies in the form of SWOT collaborations.

SWOTs are designed to identify drug development candidates for clients and can be regarded as surrogate chemistry or as a supplement to a client's existing chemistry program.

These collaborations, Dalton said, are expected to satisfy a growing trend to outsource research to meet an industry-wide demand for more productivity.

In addition to research funding, SWOTs provide milestone payment and royalty income.

"Other companies are doing something similar to this," Dalton said, "but we are prepared to do it in short-time collaborations designed to meet our client's specific program objectives. There is an industry-wide need for this type of service."

SIDDCO currently has 12 employees. The company, Dalton said, has been cash positive since the initiation of operation on June 2, 1997. *