Soviets Seek Stake in Calif. Biotech Firm

In a deal that could break new ground in U.S.-Soviet business relations, a Soviet research institute is negotiating to acquire a 5% stake in a fledging Silicon Valley biotechnology company.

The agreement under negotiation is unusual in that the Soviets would be teaming with a U.S. venture capital firm.

The Soviets would acquire the stake by contributing new technology to the venture, in hopes of finding commercial applications for the technology. The technology involved would be used to speed the production of test-tube proteins.

The U.S. company is Transgene, recently founded by a group including K. P. Wong, a professor of chemistry at California State University, Fresno. Transgene’s main owner is Sierra Ventures, a Menlo Park, Calif.-based venture capital firm.

Petri Vainio, a Sierra Ventures associate working on the deal, said he believes that a final partnership agreement will be reached within a few weeks with the Soviet Institute of Protein Research.

“We have reached an agreement with the institute,” Vainio said. “What we’re doing now is getting official Soviet approvals for the agreement, along with getting U.S. approval.”

He described the deal as “an important role model” in bringing together the Soviet establishment with Western venture capital.