Shares of biotech company Tularik ( TLRK) were climbing sharply after the company reached a deal to work with industry giant Amgen ( AMGN) on the development and commercialization of new cancer therapies.

Under the terms of the agreement, Amgen will select oncology targets identified by Tularik, and the companies will jointly work on drug discovery and development programs over a five-year period. As part of the collaboration, Amgen agreed to purchase $35 million worth of newly issued Tularik common stock at $10 a share. Over the next three years, Amgen will acquire an additional $40 million in new Tularik common stock at the prevailing market prices.

Tularik expects to receive $125 million in committed funding through the deal. The company's shares were climbing $2.39, or 38%, to $8.73.

In a separate transaction, Amgen has agreed to purchase 6 million Tularik common shares from ZKB Pharma Vision AG. Following the required antitrust approval, Amgen will buy an additional 3 million shares from ZKB. Combined with the initial shares purchased as part of the oncology collaboration, Amgen will hold a 21.3% stake in Tularik.

As a result of the deal, Tularik now expects to report revenue of $25 million to $30 million for 2003, up from its prior guidance of $20 million to $25 million. The company expects its cash burn to drop to $90 million, down from the previous estimate of $100 million.

Another drug company on the move was Vion Pharmaceuticals ( VION), which saw its shares rise 35 cents, or 40%, to $1.22. The company said Wednesday it was starting a new Phase II trial of a treatment for use in patients with nonsmall-cell lung cancer.

On the whole, the sector was under pressure, with the Amex Biotech Index down 0.6% and the Nasdaq Biotech Index off 0.5%. One of the factors weighing on biotechnology was a downgrade of the sector by Morgan Stanley, which said some of the valuations in the group were getting too rich. The Amex Pharmaceutical Index was ticking down 0.2%.