As an indication that high-throughput structural analysis of proteins is gaining a strong foothold in big pharma’s drug discovery process, Structural Genomix and Eli Lilly announced a wide-ranging collaboration last week in which SGX agreed to create a clone of its x-ray crystallography platform for Lilly.
Over the next 12-18 months, SGX will rebuild its platform for Lilly, including its cloning and expression techniques, automated high-throughput crystallization capabilities, and LIMS system. The only thing SGX is not including, at least for now, is access to its dedicated beamline at the Advanced Photon Source, according to Herbert Mutter, SGX’s vice president for finance. Components of the platform, he added, are proprietary technology. Also, while Lilly will be able to utilize its in-house facility for its own research, its scientists will not be allowed to use it for outside collaborations.
This is the first time that SGX has licensed its technology platform — seemingly its greatest asset. But the company saw good reason to show its trump cards to Lilly: “Long term, we don’t plan to be a technology provider,” said Mutter. “However, currently there is quite a bit of demand for our technical capabilities,” and filling this customer demand helps the company obtain significant revenues, “which is certainly attractive in the current financing environment,” he said. The company is considering offering the technology to more partners in the future, he added.
While SGX and Lilly did not disclose the financial terms of the agreement, Mutter said it will enable SGX to stay afloat for another 15-18 months, through the end of 2005, without the need to seek more equity financing.
This year, SGX will be able to make up with revenue from external deals about 70 percent of the cash it burns, he said, and the Lilly deal accounts for about a third of that.
While SGX does not disclose its burn rate, Tim Harris, its president and CEO, said at the JPMorgan H&Q Healthcare conference last year that the company had left at the end of 2001 about $50 million of the $85 million it had raised.
During the 24-month research collaboration, SGX plans to determine the structures of 10s to 20s of protein targets for Lilly, as well as structures of co-crystals with compounds provided by Lilly. Mutter did not disclose the protein classes or disease areas but indicated that SGX’s internal focus — protein kinases — is generally also the focus of its partnerships. The deal includes an option to extend this work for another 12 months.
SGX is seemingly unworried about potential overlap between its own drug discovery projects — mainly in the area of kinases in oncology — and that of its partners. Rather, collaborations like this one are “building up a knowledge base for the company that in many ways is enfranchising some of our internal programs,” Mutter said. Also, in addition to revenues, these projects help SGX establish strong relationships with pharma, “such that it will expand our future collaboration opportunities with those companies,” he said.
So why did Lilly see a need to establish a high-throughput structural biology facility of its own? Lilly representatives declined to be interviewed for this article, but according to Mutter, other pharmaceutical companies have gone down a similar route, placing more emphasis on structural genomics: for example Pfizer, whose Warner Lambert subsidiary acquired structure-based HIV drug company Agouron in 1999; and Johnson & Johnson with its acquisition of 3-Dimensional Pharmaceuticals at the end of last month .
According to Mutter, Lilly reviewed a number of structural genomics companies for almost two years before deciding to partner with SGX. This process, he said, did not involve any pilot projects but “doing an extreme amount of due diligence” on Lilly’s side.
Most drug companies have x-ray facilities to study the three-dimensional structure of protein targets and drugs bound to them, but “in many instances, by the time the structure was obtained, the target had already gone into lead optimization,” said Mutter. With SGX’s approach, the structures of crystals and co-crystals would be solved first, helping in the development of leads.
In addition to Lilly, SGX has collaborations with Boehringer Ingelheim, Aventis Pharma, and Millennium Pharmaceuticals.