By Debbie Strickland

Special to BioWorld Financial Watch

With multiple high-profile approvals in the last two years, monoclonal antibodies seem to be finally coming of age as a major means of generating large numbers of drug candidates for a variety of disease targets.

The recent approvals include Rituxan (rituximab), developed by IDEC Pharmaceuticals Corp., of San Diego, and Genentech Inc., of South San Francisco, for certain forms of non-Hodgkin's lymphoma; Zenapax (daclizumab), developed by Protein Design Labs Inc. (PDL), of Fremont, Calif., and Hoffmann-La Roche Inc., of Nutley, N.J., for preventing rejection of kidney transplants; Genentech's Herceptin (trastuzumab), for treating certain forms of breast cancer; Gaithersburg, Md.-based MedImmune Inc.'s Synagis (palivizumab) vaccine for respiratory syncytial virus; and Malvern, Pa.-based Centocor Inc.'s Remicade (infliximab), for treating Crohn's disease. Centocor last month filed a supplemental BLA to expand the Remicade label into rheumatoid arthritis, potentially a blockbuster indication.

Investors have taken note of antibodies' spate of regulatory success and driven up the stock prices of three U.S. companies specializing in core technologies for such products. As of Thursday's market close, shares in Abgenix Inc. (NASDAQ:ABGX) were up 177 percent for the year, closing at $45; Medarex Inc. (NASDAQ:MEDX) was up 131 percent, to $7; and PDL (NASDAQ:PDLI) was up 73 percent, closing at $40.06. Those gains outpace the year-to-date Nasdaq Biotech Index's rise of 34 percent.

"These approvals have put antibodies on the map," said Kurt Leutzinger, vice president and chief financial officer of Fremont, Calif.-based Abgenix. "Regulators have become a lot more comfortable with antibodies, pharmaceutical companies see them as a viable alternative to small-molecule drugs, and clinicians are starting to work more with antibodies and get more comfortable."

"With every new technology that comes along, it takes awhile to work out the bugs," said Donald Drakeman, president and CEO of Annandale, N.J.-based Medarex. "The decade of the '90s is the time the industry worked out the antibody bugs. Right now, it's the most efficient and rapid technology for creating a product, if you have an interesting target, and getting that product onto the market."

Antibody firms say their way of treating disease offers several key advantages over small molecules:

*A quicker route to the clinic. It is quick and efficient to let immune cells do the work of creating a molecule that binds the action of a biological target. Medarex, which uses transgenic mice to create fully human antibodies, said its technology can generate antibodies within months.

*Fewer side-effect kinks to work out during development. Antibodies are highly specific to their targets and do not react with unintended cells and biochemicals. Of course, to get a viable therapeutic, one must make sure the targets are safe ones to bind (for example, a target that is key to cancer but also to proper heart functioning would likely fail the safety test).

*A long half-life, which can improve compliance even though the products are administered via injection. A patient may only need to be dosed once a month, rather than taking pills every day ­ a factor that can help overcome the traditional advantage of oral delivery.

To date, PDL's technology has been the leading platform for generating humanized antibodies ­ antibodies that are generated in mice but that can be administered to humans without triggering immune responses. The company has granted more than 20 licenses for its technology, which combines the binding portion of a relevant mouse antibody with about 90 percent of a human antibody. PDL works with collaborators, generates products in-house, and licenses its technology for nonexclusive use to companies developing products independently (Synagis and Herceptin, for example, both provide royalty streams to PDL under such licenses).

But PDL's heretofore dominant technology faces competitive challenges from Abgenix and Medarex, which use transgenic mice to generate fully human antibodies, and from two European companies that create vast libraries of fully human antibodies using ex vivo processes. The European companies, Cambridge Antibody Technologies plc, of Melbourn, Cambridgshire, UK, and MorphoSys GmBH, of Martinsried, Germany, use phage display systems as part of their programs and have been locked in a patent dispute this year, with both sides claiming victory in a ruling last month.

The U.S.-based mouse companies likewise use similar technologies but are parties to a cross-licensing agreement to avoid patent litigation. Removing that shadow has attracted many new partners ­ biotech, pharma and academic ­ to each company. "That settlement has been favorable ­ both [Abgenix and Medarex] have been able to go into the market and get deals," said Carl Gordon, an analyst with OrbiMed Advisors LLC in New York.

The two companies, however, are advancing as lead candidates antibody products that did not arise from their transgenic mice. At Abgenix, the lead product is ABX-CBL, an antibody therapy for graft-vs.-host disease that has completed Phase II testing. Since GVHD patients are immune-compromised, the immune response common to mouse antibodies has not been a problem.

"We in-licensed this antibody to prime the pump, if you will, and get our clinical program started as XenoMouse products became available," Leutzinger said. "It was a pragmatic way to get our clinical program started."

Although Abgenix has a fully human version in preclinical development as a potential therapy for autoimmune disorders, the plan is to continue moving forward with the original.

As for Medarex, the firm had clinical-stage programs under way based on its bi-specific antibody technology prior to its 1997 purchase of GenPharm International Inc., the company that invented the HuMab Mouse for generating human antibodies.

Those programs have suffered a couple of setbacks in the past year, noted Mehta Partners LLC analyst Niva Almaula, and those setbacks help explain why Medarex's market capitalization is about one-third of Abgenix's. Last December, the firm suspended enrollment in a Phase III trial of a cataract therapy that combines an antibody with a toxin. Then, in March, Basel, Switzerland-based Novartis AG dropped out of a collaboration for MDX-210, an anti-HER2 cancer product (Novartis, however, remains in a $50 million HuMAb-Mouse collaboration).

HuMAb Mouse projects, meanwhile, are moving forward in the pipeline; the first, MDX-CD4, entered the clinic this year for the treatment of rheumatoid arthritis.

Abgenix is a bit further along with its lead XenoMouse candidate, ABX-IL8, which binds interleukin-8. The product has completed Phase I/II trials in psoriasis, and the company is considering multiple Phase II trials next year, with possible expansion to rheumatoid arthritis.

But like other antibody firms, Abgenix's internal programs are only the tip of the iceberg. Collaborations and licensing deals are central to the business strategy.

"We would like to broadly distribute the technology and put it into a lot of hands," Leutzinger said. "For example, we have many collaborations with academic researchers, who receive our mice and perform their research on our mice. The arrangement is that we would have rights to potential therapeutic products that emerge from that research. This is a way of attracting novel targets to us."

The firm's biotechnology collaborators include Amgen Inc., of Thousand Oaks, Calif., Centocor, Genentech., and Millennium Pharmaceuticals Inc., of Cambridge Mass.

GenPharm Purchase A Smart Move

Medarex's GenPharm purchase is looking like a very smart move today, with 13 partners having come aboard, including biotech collaborators like Immunex Corp., of Seattle, and LeukoSite Inc., of San Antonio. Medarex and Abgenix have some of the same partners, including Centocor and Amgen.

Medarex's internal antibody development program is seeking to acquire rights to targets, and in August Gilead Sciences Inc., of Foster City, Calif., sublicensed to Medarex rights to use CTLA-4 as an antibody target. CTLA-4 is a receptor protein found on the surface of T cells and is believed to suppress the attack of immune system killer cells. Blocking the receptor may allow the immune system to recognize and vigorously attack foreign pathogens and cancers.

Two recent agreements illustrate the range of companies with which Medarex works. In August, the company signed a deal with Eos Biotechnology Inc., a young, privately held South San Francisco firm, which allows Eos to use the mouse technology to generate antibodies to its genomics-derived targets. The next month, the firm signed a deal with biotech powerhouse Amgen calling for Medarex to use the HuMAb Mouse to create antibodies to multiple undisclosed targets.

"We breed 'em, we feed 'em and we mail 'em," Drakeman said, referring to the low cost of holding up Medarex's end of many of its agreements. "Most of our partners are working with mice on their own, and [when they acquire HuMab mice] they're just making an antibody in our mouse. It's a tried and true technique.

"Our goal is to make this technology available to as many companies as possible," he noted, "so that it can be a basic tool of their drug development programs. We have partnerships with a number of smaller biotech companies, including privately held biotech companies. In some cases, our technology may be their core business, if they have an interesting target and making a human antibody to that target is what they're all about."

At the more mature PDL, the emphasis is shifting to product development, with the intention of developing internal marketing expertise, said Robert Kirkman, vice president for business development and corporate communications.

The company last month agreed to take on clinical development of Zenapax in autoimmune indications in exchange for receiving a majority of net sales for all autoimmune indications in the United States and Canada, where PDL will market the drug in those indications.

PDL also is boosting its internal pipeline ­ which boasts seven clinical-stage products ­ through new deals with Axys Pharmaceuticals Inc., of South San Francisco, with which PDL signed a drug discovery agreement; and SmithKline Beecham plc, of London, from which PDL licensed asthma targets.

The company has continued to add new humanization licensees in 1999, including pharma companies like Japan's Fujisawa as well as a deal with Progenics Pharmaceuticals Inc., a Tarrytown, N.Y. biotchnology firm, under which PDL will humanize Progenics' anti-HIV antibody.

As for the competitive threat posed by the new, fully human antibody platforms, Kirkman said PDL is not worried. "There are 40 humanized antibodies currently in the clinic that we know about; that's far in excess of antibodies in testing from any other source, whether mouse or phage display. Extensive clinical experience shows they do what they're supposed to do." *