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Pharmaceuticals Spins Off Agricultural Biotech Subsidiary

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SOUTH SAN FRANCISCO, Calif.--In a move that will enable the drug discovery firm to apply its genomics, combinatorial chemistry, small-molecule research, and bioinformatics technologies to the agricultural market, Axys Pharmaceuticals announced May 28 that it will form an agricultural biotechnology subsidiary.

Created through the merger of Arris Pharmaceuticals and Sequana Therapeutics earlier this year, Axys has a broad platform of technologies in drug discovery with capabilities ranging from gene sequencing and genotyping and the bioinformatics they require, to functional genomics, CEO John Walker said. He told BioInform, "We recognized that there is an awful lot of our capability that is clearly of use to agricultural biotech researchers."

Collaborations and mergers between pharmaceutical and agriculture companies that take advantage of crossover technologies are occuring at a rapid pace. But, Walker said, Axys's move breaks new ground in the biotech market. "Smaller companies with significant investment in technologies designed to discover drugs are just starting to find opportunities to deploy those technologies into the agricultural market," he said. He noted that the first major move by a biotech into agriculture was done through a collaboration: "Millenium's agreement with Monsanto last fall to push all of its technology into Cereon, a 100 percent owned subsidiary of Monsanto."

Walker said Axys decided against pursuing collaborations with existing agriculture companies, opting instead to start its own business. "We felt the best approach for us was to create a new business enterprise and to look at creating value through a new vehicle," he said.

By forming a separate entity, Walker said Axys was able to raise focused capital and attract management through stock programs and incentives.

Jerry Caulder, former CEO of Mycogen and previously of Monsanto, will serve as founding chairman and CEO, responsible for developing corporate partnerships and for recruiting a management team for the yet unnamed company, which will be based in San Diego.

Axys intends to supply the new company with a worldwide exclusive license to its technologies, and will retain a majority equity interest. Still, Walker said the subsidiary is intended to be a freestanding enterprise. "Initially they will acquire most of their technology capabilities from Axys, but will evolve to the point where they have transferred technology into this new enterprise and become self-sufficient," he said.

Walker said the combination of Axys technology with Caulder's management experience and the "knowledgeable capital" of San Francisco-based merchant bank Bay City Capital, the initial funding provider, were key elements in the creation of the new enterprise.

Bay City's Roger Salquist, former CEO of Calgene, and John Diekman, who chaired Affymetrix and served as CEO of Zoecon and Affimax, will be general partners in the new enterprise.

Walker said operations of the new company have already commenced: "Some of our work on target validation systems and bioinformatics have been tweaked or applied to the agricultural area, and we are in discussions with potential collaborators on programs that will give rise to an infrastructure at the new company."

--Adrienne Burke

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