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With Software Sales Strong, Pharmacopeia Seeks Buyer for Drug Discovery Business

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In the wake of its aborted merger with Eos Biotechnology, Pharmacopeia is still weighing its options for the future of its two business units: the Accelrys software division, which is expected to generate profits of between $9 million and $10 million in 2002; and its drug discovery unit, which is anticipated to see an operating loss of $5 million this year.

Speaking at SG Cowen’s recent annual health care conference March 14 in Boston, Pharmacopeia CEO Joseph Mollica said the company was “looking for opportunities” to sell the drug discovery business or for a larger genomics or bioinformatics firm to take a stake in it. Sue Rodney, manager of investor relations at Pharmacopeia, later confirmed that the company is seeking a buyer for its discovery business amid “pure play genomics companies” and other firms with a larger market capitalization.

If recent history is any indication, Pharmacopeia shouldn’t have a hard time finding a willing buyer among the likes of Incyte, Celera, and other firms who have set their sights on drug discovery over the past year.

Acknowledging that Pharmacopeia’s plan to dump its discovery activities in favor of its tool business bucks the prevailing trend among bioinformatics firms to build or acquire discovery capabilities, Rodney noted that by voting against the Eos merger, the company’s shareholders “made it very clear that they were not interested in us augmenting our existing technology.” Believing that Pharmacopeia’s drug discovery platform is undervalued, “the only way to maximize that technology, which we still have a lot of confidence in, would be to combine it with another company that’s pursuing a similar strategy of discovering drugs.”

The ideal home for the company’s medicinal chemistry, combinatorial chemistry, and high-throughput screening capabilities would be a firm that already has a rich pipeline of targets, Rodney suggested.

Earlier this month, Pharmacopeia’s CFO, Bruce Myers, announced his plans to step down in May. Rodney said that it’s likely the CFO position would not be filled until the future of the drug discovery business is decided.

— BT

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