By Frances Bishopp

Terminating one of the early and history-making collaborations between a genomics company and a research institute, Human Genome Sciences Inc. (HGS) and The Institute for Genomic Research (TIGR) have decided to separate under a new agreement in which HGS will stop future payments to TIGR in return for relinquishing rights to future work done by TIGR.

The new agreement ends the HGS/TIGR relationship, which began in September 1992 in a $70 million collaboration between the two organizations slated to last for 10 years. Under this agreement, HGS received exclusive worldwide intellectual property rights to work done by TIGR, independent of funding source. The following year, the funds increased to $85 million.

TIGR is a nonprofit institute located in Rockville, Md.

"The original HGS/TIGR agreement marked the start of the genomic revolution in biotechnology," said William Haseltine, chairman and CEO of Human Genome Sciences, also of Rockville.

"TIGR was very important in the early days," Haseltine said. "They created a high-throughput screening facility, which was the first of its kind. Together HGS and TIGR were the first to isolate and characterize the majority of human genes, an achievement summarized in a joint publication of about 150,000 partial sequences, which appeared as a genome directory in the September 1995 issue of Nature," he said.

Since April 1994, TIGR had ceased its work on partial cDNA sequences, Haseltine said, and concentrated primarily on microorganisms and plants. "Some of the microorganisms were of medical value, and many were not," he said, adding that by April 1994, HGS had a sequencing capacity that far exceeded TIGR's.

Under the new agreement, HGS will retain all rights to patents granted now or in the future on work by TIGR prior to the new agreement. Also, TIGR has agreed not to enter into commercial agreements for the next four years on selected therapeutic proteins (proteins used as drugs) and associated diagnostic tests in development by HGS.

TIGR has agreed to share with HGS any proceeds from all commercial agreements relating to human therapeutic proteins completed within the next two years. In exchange for this limited non-compete agreement, HGS has granted to TIGR and its non-commercial collaborators a research license for its prior work.

The agreement relieves HGS of a funding obligation to TIGR of more than $38 million over the next five and one-half years.

"This was a mutual and amicable agreement," Haseltine said, "to end the agreement."

From HGS' point of view, Haseltine said, the funds were much better used to support internal research and product development. From the TIGR point of view, he continued, they were caught in a squeeze between their obligations to HGS and obligations to\ independent funding agencies that either demanded patent rights in return for funding or demanded rapid publication of raw sequence data of the type that TIGR does.

"This was a relationship that had greatly diminished value after the early days," Haseltine said, "as we had amassed independently more than 10 times the human cDNA data as was created by our joint efforts. We are now focusing on product development as well as gene discovery."

Haseltine pointed out that the original 1992 HGS/TIGR agreement paved the way for HGS' May 1993 $125 million agreement in genomic research with SmithKline Beecham plc, of London, which is still one of the largest deals between a major pharmaceutical company and a biotech company.

"We were able to convince SmithKline that this was a viable and useful technology [high throughput gene sequencing]; we were able to demonstrate it was functional and that we had the exclusive rights to it," Haseltine said.

The 1992 agreement gave HGS all patent rights to TIGR's discoveries and prevented TIGR from rapid publication.

With the new agreement, TIGR will be permitted immediately to publish all new genetic material, Craig Venter, founder and head of TIGR, told BioWorld Today. The agreement will allow TIGR to "deal with anyone we want, in any area, instead of having all of our information go to one biotech company."

The fact that TIGR was willing to give up $38 million over the next five years, Venter said, "tells you how important it was to us," and added TIGR will be potentially starting a new company in the antibiotic area as well as pursuing new collaborations with various biotech and pharmaceutical companies.

HGS' stock (NASDAQ:HGSI) closed Tuesday at $34.50, down $0.25. *