Regeneron Pharmaceuticals Inc. unveiled the first licensing deal for what it believes is a revolutionary antibody discovery technology, a nonexclusive agreement with a guarantee of $80 million.

AstraZeneca plc paid Regeneron a $20 million license fee for the VelocImmune technology and will pay $20 million per year over the next five years, for a potential of $120 million. The first three of those additional payments are committed. Regeneron also would get a mid-single-digit royalty on any resulting sales.

George Yancopoulos, chief scientific officer at Regeneron and president of Regeneron Research Laboratories, said signing the first licensing deal with AstraZeneca was significant since that company has so much experience in the antibody area.

"It's fair to say there's a lot of interest in the technology, since people are beginning to recognize that this may be the new standard for creating human monoclonal antibodies in a mouse," Yancopoulos told BioWorld Today.

He said the deal and its structure "were very attractive to us since we simply provide the mice. It does not require more work, or other deliverables; there are no other obligations. Basically, these resources go straight to supporting our other programs. That speaks to the value of the technology."

Regeneron, of Tarrytown, N.Y., has a two-pronged strategy for the antibody platform. One is to use it to enhance its own clinical pipeline, with a goal of moving two candidates into the clinic each year starting by the end of this year. That strategy could include collaborative efforts. The second strategy is to use the technology as a "resource-generating vehicle," Yancopoulos said.

"This [deal with AstraZeneca]," he said, "is an example of the latter. The technology has a very exciting capability, so sophisticated users of antibodies are willing to pay a premium for it."

Under the nonexclusive license, AstraZeneca, of London, is free to generate human antibodies in any area of interest. It has a lot of experience in antibodies, having had a broad collaboration with Abgenix Inc. (bought by Amgen Inc. last year for $2.2 billion), and having paid $1.1 billion last year to acquire Cambridge Antibody Technology Group plc, previously one of the major players in the antibody field.

AstraZeneca said work with the Regeneron technology will be done by the CAT unit in the UK, and in combination with CAT's display technologies.

"We have internally recognized how empowering this technology could be," Yancopoulos said. That AstraZeneca, with it expertise in the field, would pay $20 million per year for access to it "provides a very impressive external validation that what we feel and what we've been saying passes the scrutiny and due diligence of a sophisticated outside customer. They recognize the advantages."

The VelocImmune platform is designed to overcome limitations of speed, efficiency and other areas present with existing mouse and in vivo approaches. AstraZeneca essentially gets a breeding pair of mice that have had more than 6 megabases of mouse immune genes replaced with their human counterparts, a number significantly larger than used before. "We can put genes in precisely where they belong in the mouse genome, and do it at a scale never previously even contemplated," Yancopoulos said.

The National Institutes of Health in September awarded Regeneron a five-year grant to use the technology as part of the NIH's Knockout Mouse Project. The goal of that program is to build a comprehensive and broadly available resource of knockout mice to accelerate the understanding of gene function and human diseases.

Regeneron is using VelociGene technology in that effort with the NIH, a technology for creating genetic modifications in a mouse in a precise and high-throughput manner. That platform is interrelated with the VelocImmune technology for creating fully human antibodies, and with the VelociMouse technology.

Regeneron already has commitments of hundreds of millions of dollars from two partnerships on its VEGF Trap programs. Both those deals entailed higher front-end fees than is standard in the industry. Yancopoulos said that Regeneron moving its discovery efforts from the successful Trap technology to VelocImmune shows how powerful it believes the new technology to be.

Regeneron got $75 million up front in October and is eligible to receive up to $245 million in milestone payments from a VEGF Trap deal with Bayer HealthCare covering only diseases of the eye. Regeneron retained all rights to that program in the U.S., and would share profits on sales outside the U.S. A Phase II trial is ongoing in wet age-related macular degeneration, with Phase III trials expected to begin later this year.

The Trap technology is partnered on a worldwide basis in cancer in an even bigger deal with Sanofi-Aventis Group, of Paris. The technology is being tested in a number of cancer applications, and three large Phase III combination trials are expected to begin in 2007.

Regeneron's third clinical-stage program is IL-1 Trap, which it is developing itself for the orphan disease CIAS1-associated periodic syndromes. A biologics license application is expected to be filed in the second quarter of 2007, Yancopoulos said, with the plan being to pursue other indications following approval.

"Bayer and Sanofi have committed more than $600 million over the next few years, so those programs are well resourced," he said, adding that Regeneron ended 2006 with more than $520 million in cash.

Regeneron's stock (NASDAQ:REGN) fell 72 cents Monday to close at $19.46.