Affymax N.V. and Wyeth-Ayerst Laboratories, a division ofAmerican Home Products Corp. (AHP), on Monday announced abroad research and development collaboration that will coverdrug discovery in therapeutic areas such as atherosclerosis,central nervous system disorders, breast cancer, endometriosisand osteoporosis.

Under the agreement, Wyeth-Ayerst will make R&D paymentsof $47 million to Affymax and will purchase $10 million worthof the company's common stock at $20 per share.

Affymax specializes in the development and application oftechnologies that accelerate drug discovery and design. Its verylarge-scale immobilized polymer synthesis (VLSIPS), forexample, can synthesize large numbers of different compoundson silica chips. Its encoded synthetic libraries (ESL) technologycan be used to automate the synthesis and screening of billionsof discrete chemical compounds on the surface of microscopic,cell-size beads. Affymax's recombinant peptide diversity (RPD)is a technology used to generate large numbers of peptides onbacteriophage.

Affymax of Amsterdam, the Netherlands, can apply itstechnologies to peptide- and oligonucleotide-based drugs, andis beginning to apply its design approach to small moleculedrugs, Affymax's chief financial officer, Denise Gilbert, toldBioWorld.

The $57 million minimum investment could climb significantlyif Affymax reaches certain clinical milestones, and the companyalso will receive royalties from the sales of any productsresulting from the collaboration. Since the additional paymentsare based on clinical milestones for an as-yet-undeterminednumber of drug candidates, the company cannot estimate itstotal potential payments from the collaboration, Gilbert said.

Wyeth-Ayerst's purchase of 500,000 Affymax common shareswill give it an approximately 3 percent stake in Affymax,Gilbert said. Wyeth-Ayerst also has the option to extend thefive-year agreement by up to two additional two-year periods.

One of AHP's forays into biotechnology was its 1992 mergerwith Genetics Institute, and AHP also announced Monday thatWyeth-Ayerst Research's president, Robert Levy, has joinedGI's board of directors, replacing Bernard Canavan, who retiredJan. 31. AHP also has several other collaborations withbiotechnology companies, including Oncogene Sciences Inc.,Pharmaceutical Proteins Ltd., Athena Neurosciences Inc., AlzaCorp. and Cygnus Therapeutic Systems Inc.

Affymax (NASDAQ:AFMXF) also relies heavily on collaborations.According to Gilbert, about half of the company's developmentefforts are being conducted under the auspices of an alliance orcollaboration. Affymax's focus on drug discovery lends itself tothis strategy, she explained, because the company can look tobigger partners for input in the expensive process of drugdevelopment and commercialization.

Affymax's stock was up $1.75 a share on Monday, closing at$18.

-- Karl A. Thiel Business Editor

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