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DoubleTwist Signs On Merck, Postpones IPO

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DoubleTwist has licensed its annotated human genome database package to Merck, the first major pharmaceutical company to publicly sign on for the company’s database.

Under the terms of the two-year deal, Merck and seven of its affiliates will use DoubleTwist’s Prophecy annotated human genome database in their drug discovery efforts.

The deal also includes access to software for data interpretation and visualization.

Financial terms of the deal were not disclosed. Merck did not return calls seeking comment about the decision to subscribe to Prophecy.

DoubleTwist, however, said that the deal would further strengthen its relationship with Merck.

“We are pleased to expand our existing relationship with a leading pharmaceutical company such as Merck,” DoubleTwist CEO John Couch said in a statement. “Prophecy provides a secure way for Merck to rapidly access and integrate our regularly updated annotated data within its in-house software systems.”

DoubleTwist of Oakland, Calif., would not speak further about the deal, citing Securities and Exchange Commission restrictions in the run-up to their planned initial public offering.

DoubleTwist filed for an IPO in September, but a source close to the company said that the offering would not take place until the first quarter of next year, citing current market conditions.

“The IPO has been postponed until Q1 of ‘01,” said the source, who requested anonymity. “It’s a bloodbath out there now – there is nothing fundamentally wrong with the company.”

According to the company’s S1 statement, DoubleTwist hopes to raise $86 million in the offering. Proceeds would be used to enhance its existing products as well as develop new ones. The company would also use some of the money to expand sales and marketing activities.

Excitement about the human genome project helped bioinformatics companies such as Compugen, Lion Bioscience, Rosetta Inpharmatics, InforMax, and Genomica to raise tens of millions of dollars in IPOs earlier this year, despite having low revenues and widening net losses. Since October, however, no bioinformatics companies have issued shares.

In addition to DoubleTwist, bioinformatics company NetGenics is also waiting in the IPO queue.

The source said that the IPO pipeline was frozen for companies in a wide range of sectors.

“I know of only three companies that are on the road and looking to price,” said the source. “They’re having a bit of a problem getting buy-side meetings and orders.”

According to its SEC filing, DoubleTwist posted revenues of $2.8 million in the first six months of the year, up from $1.9 million in the year ago period. The company’s losses widened to $16.4 million in the first half of 2000, from $4 million a year ago.

—Jennifer Friedlin

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