January 13, 2003

For Immediate Release

Sagres Lands Boehringer Ingelheim Deal as it Assembles the ÔOncogenomeÕ

FUNCTIONAL genomics company Sagres Discovery, which last week signed a multi-year collaboration with Boehringer Ingelheim to identify oncology drug targets, exemplifies a "newer wave" of bioinformatics methodology, according to CEO and co-founder David Ferrick.

"WeÕve gone from a predictive to more of a deductive type of bioinform-atics," said Ferrick of the Davis, Calif.-based startup.

Sagres relies very heavily on bioinformatics as part of its discovery process, Ferrick said, but has shifted the traditional emphasis a bit. Using a high-throughput retroviral approach, company scientists first experimentally identify genes that are likely to cause tumors in vivo in mice, deriving a subset of several thousand that they have dubbed the "Oncogenome." The bioinformatics comes in after this step, with all the advantages of a smaller data set that has been functionally verified experimentally.

"By doing this Oncogenome screen, instead of having to look through the genome, which is where a lot of peopleÕs starting point is, weÕre actually start-ing at the point of where cancer is caused in vivo," Ferrick said.

The Boehringer Ingelheim deal, the companyÕs first pharmaceutical collabo-ration, is significant, Ferrick added, because it will "prove that our starting point in discovery is maybe better than how people have traditionally been starting their discovery efforts."

Under the agreement, Boehringer Ingelheim will have exclusive rights to certain targets to develop and market antibody and small-molecule products world-wide, while Sagres will retain rights to certain targets and will also receive a "significant" up-front payment, additional research funding, milestone payments, and royalty payments from prod-uct sales. Financial details were not disclosed.

Kerstin Felix, a Boehringer Ingelheim spokeswoman, declined to comment on the selection of Sagres as the companyÕs research partner, noting only that the deal is part of Boehringer IngelheimÕs oncology strategy.

NOVEL GENES, NEXT-GENERATION DATABASE
Sagres claims to have the largest single repository of onco-genes in the industry, and is pursu-ing an aggressive patenting stra-tegy to protect genes it has identified through its unique com-bination of experimentation and bioinformatics. Ferrick estimates that up to 30 percent of the thou-sand or so genes it has found so far are entirely novel.

The company has built a suite of software tools to help it map cancer-causing mouse genes in the Celera database to their orthologs in the human genome. While mouse-human synteny maps are now appearing in the public domain with the recent publication of the mouse genome, Ferrick said that when Sagres began its work two years ago, it had to develop all of its mouse-human mapping programs from scratch.

Sagres is also building statistical and graphical tools to help it analyze the various combinatorial possibilities of mutations within cellular path-ways Ñ combinations of co-muta-tions that are likely, or not likely, to cause cancer. Public and in-house data are integrated into a relational database that Sagres researchers can query.

Although Sagres has identified drug discovery as its primary goal, Ferrick hasnÕt ruled out the possibil-ity of delving into the data-provider business in the future. The company is currently developing a portal that will initially allow its collaborators to access and view the fully annotat-ed Oncogenome. Eventually, howev-er, "We would hope to become the purveyor of a lot of that information to the public as well."

Once Sagres has mined the information it needs from its data-base, it hopes to become "the centralized clearing house" for the information. Ferrick has no doubt that thereÕs plenty of information in the resource for others once Sagres has skimmed its share off the top: "We canÕt exploit it all, not even close."

Sagres seems to have learned a valuable lesson from Celera, which started life with the intention of selling data, and later realized the limited revenue potential of that model and turned to discovery as plan B. Ferrick explained that Sagres plans to work out a fair balance between its own discovery priorities and those of its academic and commercial collaborators. "We want to hopefully do a little better job than Celera did with the public in terms of working out a consor-tium so that it can get to investiga-tors without necessarily compro-mising our ability to grow as a company," he said.

Ferrick noted that the company has the advantage of following in CeleraÕs footsteps: "They went for the structural genome first, while we went for the functional cancer genome first. So obviously the structural genome has limited value. It just tells you the playing field, it doesnÕt tell you what any-oneÕs doing in that field."

He was quick to note, however, "if we didnÕt have Celera, we couldnÕt do what we did. Because we have a genome thatÕs struc-turally defined, it allows us to pinpoint where the biology is occurring, so thatÕs a very impor-tant component."

Yet despite his admiration for CeleraÕs contribution to genomics, Ferrick took the opportunity to gloat a bit. "TheyÕre going to regret the day they gave [the genome data] to us or companies like us. WeÕre going to derive way more value than theyÕre ever going to see from it."

Sagres Discovery
Sagres is a discovery stage company dedicated to understanding the molecular basis of cancer. Sagres DiscoveryÕs technology platform combines the biology of cancer formation in mouse models with the robustness of high-throughput genomic technologies to enable discovery and clinical validation of human cancer genes at unprecedented speed. The Company is assembling the Oncogenomeª, one of the most comprehensive sets of oncology targets in the world. Of equal importance, the technology allows for the discrimination between genes that cause disease and those that affect or respond to disease processes. In addition to its own internal drug discovery program, the Company is building its initial product pipeline by selectively using strategic partnerships and collaborations. Sagres is located in Davis, California.

This press release is made as a matter of record, and is not intended, nor should be interpreted, as a recommendation or solicitation to invest in any company or in any Axiom entity.