Assistant

Strengthening its position as a major antibody player, Genmab A/S said it is securing its own manufacturing capability in a deal to acquire troubled PDL BioPharma Inc.'s Brooklyn, Minn., facility for $240 million.

The deal, which also includes the land, equipment and access to a leased space housing a development lab, provides Copenhagen, Denmark-based Genmab with the production capacity of 22,000 liters, which should be sufficient for the manufacture of multiple antibody products from the company's growing pipeline, said CEO Lisa Drakeman, calling the buy a "landmark transaction for us."

It "shows that we have reached a point where our pipeline has grown so much that we can actively, not only support and fill a facility like that, but that, over time, it will be significantly cost-effective for us," she said during a conference call.

The move also effectively ended recent speculation that Genmab might be an acquisition target, possibly from ofatumumab partner GlaxoSmithKline plc. Faint rumblings emerged after Princeton, N.J.-based Medarex Inc., which spun out the Danish company in 1999 to develop HuMax-based antibody products, said earlier this month it was selling off 2.5 million Genmab shares, further reducing its stake from 11 percent to 5 percent.

Genmab's investment in a manufacturing facility, however, seemed to defy such rumors, as its new capability ensures that the firm will have access to sustainable quantities of antibody product without having to rely on contract manufacturers.

"This will give us control over the entire R&D process," Drakeman said, and also might allow Genmab to shorten development timelines and offer an attractive asset in prospective partnership discussions.

Also, she added, that because Genmab was able to purchase an existing facility - and plans to keep the 170-member team there - the company will be able to recognize an estimated $100 million over the next four years that would have gone to pay contract manufacturers. Had the firm been forced to build its own facility, it would have had to pay construction costs, as well as fund contract manufacturers while construction was ongoing.

In response to an analyst's question, Drakeman said the facility's "book value" was about $200 million, but "that does not include the investment in training, for example."

Genmab, which has three programs in Phase III development, anticipates moving two of those programs, namely zalutumumab (HuMax-EGFr) for head and neck cancer and zanolimumab (HuMax-CD4) in T-cell lymphoma, to the Minnesota facility.

The company said it has no existing contract manufacturing agreements for zalutumumab, and though it does have a deal with DSM Biologics for manufacturing zanolimumab, that manufacturing capacity likely will not provide enough supply for the market.

Manufacturing ofatumumab is being handled by London-based GSK, as per the companies' potential $2.1 billion collaboration agreement signed in December 2006. Ofatumumab, a HuMax antibody targeting CD20, is in Phase III trials in chronic lymphocytic leukemia, follicular non-Hodgkin's lymphoma and rheumatoid arthritis. (See BioWorld Today, Dec. 20, 2006.)

In addition to producing its own antibodies, Genmab's purchase of PDL's facility also included a provision to supply clinical material for PDL's studies involving certain pipeline products.

PDL has an early clinical program, HuLuc63, a humanized monoclonal antibody, aimed at treating multiple myeloma. Its portfolio also includes daclizumab, which demonstrated positive results in a Phase II trial last year, and volociximab, which started Phase II testing in August in ovarian cancer.

Both of those compounds are partnered with Cambridge, Mass.-based Biogen Idec Inc.

The firm, however, still is reeling from its Phase III failure of lead antibody Nuvion (visilizumab) in patients with intravenous steroid-refractory ulcerative colitis last year, prompting PDL to investigate strategic options that culminated in a vote by the board to put the firm's assets, or the firm in its entirety, on the selling block.

To date, PDL successfully has divested several assets, including cardiovascular products Cardene, Retavase and ularitide (acquired in its 2005 buyout of Edison, N.J.-based ESP Pharma Inc.), which it sold earlier this month to EKR Therapeutics Inc., of Cedar Knolls, N.J., for $85 million up front, plus up to an additional $85 million in milestones. (See BioWorld Today, Oct. 3, 2007, and Feb. 6, 2008.)

And late last year, PDL sold off rights to Busulfex IV, an oncologic product for conditioning prior to allogeneic hematopoietic progenitor cell transplantation, to Japanese firm Otsuka Pharmaceutical Co. Ltd. in a $200 million deal. (See BioWorld Today, Dec. 18, 2007.)

The company has not yet reported fourth-quarter and full-year earnings. For the third quarter of 2007, PDL posted a net loss of $6.1 million, or 5 cents per share, and, as of Sept. 30, had cash, equivalents and marketable securities totaling $409.5 million.

Shares of PDL (NASDAQ:PDLI) closed at $15.75 Thursday, up 8 cents.