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Executive Summary

CIBA-GEIGY BETTING ON ZAFFARONI AGAIN: AFFYMAX RESEARCH COLLABORATION will use Affymax proprietary screening technologies to examine three Ciba molecular targets. The screening mechanisms will include the Affymax VLSIP (Very Large-Scale Immobilized Polymer Synthesis) and "recombinant peptide diversity" technologies. Ciba and Affymax did not identify the three molecular targets but said they are important in "the treatment of diseases such as arthritis, autoimmune diseases and cancer." Under the collaborative agreement, Ciba will fund drug discovery and development work at Affymax on the molecular targets and will make an undisclosed equity investment in the firm as well as "significant" R&D payments. With the deal, Ciba-Geigy is beginning a new relationship with Affymax founder Alejandro Zaffaroni, PhD. The Swiss company has been involved with Zaffaroni operations since the late 1970s when Zaffaroni was with Alza. In addition to collaboration on the development of Ciba drugs employing Alza drug delivery systems, from 1978 to 1982 Ciba owned approximately 80% of Alza. Zaffaroni was one of the original founders of Alza. (Ciba currently owns about 5.4% of Alza, or 1.9 mil. shares, including a $ 100 mil. debenture worth about 1.4 mil. shares. Ciba is expected to convert the debenture and then sell the shares. Those steps would reduce Ciba's holding to less than 2% of Alza.) Ciba will take over the development and handle the marketing of any products deriving from the Affymax collaboration. Affymax will receive milestone payments and royalties. The Ciba agreement is Affymax's second in as many months with a major pharmaceutical firm. On June 13, Affymax entered into a strategic alliance with Marion Merrell Dow ("The Pink Sheet" June 17, In Brief). That deal, which appears to be similar in structure to the Ciba-Geigy arrangement, was the first for privately-held Palo Alta, Calif.-based Affymax. The company says in the future it plans to pursue smaller, non-equity deals for single molecular targets.

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