Takeover talks rumbled, but nobody could fully explain the mystery uptick in Genmab A/S' stock price at the start of December - and most industry observers had quit trying by last week, when the Danish firm made public its potential DKK12 billion (US$2.1 billion) deal with GlaxoSmithKline plc, touted as history's largest biotech licensing arrangement.

The pact provides GSK with worldwide rights to the late-stage antibody for cancer, HuMax-CD20, which Genmab also is testing at the Phase II stage against rheumatoid arthritis. GSK is paying DKK582 million up front as a license fee, and buying about DKK2.03 billion worth of Genmab stock - about 4.4 million shares, for a stake of about 10 percent - with more benefits available to Genmab down the road, in the form of development fees and milestone payments, as well as tiered, double-digit royalties.

Lisa Drakeman, Genmab's CEO, declined to provide details about the milestones, but said during a conference call that the payments due after launch are "certainly not the majority." HuMax-CD20 (ofatumumab) is undergoing Phase III trials in CD20 positive B-cell chronic lymphocytic leukemia and follicular non-Hodgkin's lymphoma, and Genmab will keep paying development costs until 2008, after which they will be split equally between the two firms.

Earlier this month, Genmab started a Phase II study with HuMax-CD20 (ofatumumab) in combination with fludarabine and cyclophosphamide for CLL in previously untreated patients. Fifty-six patients will be enrolled in the study. At the same time, the company offered additional positive data from the Phase I/II study in patients with relapsed or refractory CLL. Researchers noted an objective response rate of 50 percent (13 of 26 evaluable patients) in those treated at the highest dose level (2,000 mg), including one nodular partial remission (nPR) confirmed by CT scan and one patient who qualified as nPR but showed residual lymphadenopathy revealed by CT. Responders include one additional patient over data reported previously.

In RA, also this month, Genmab disclosed positive interim data from an ongoing Phase II study, in which a statistically significant number of patients on active treatment gained a 20 percent improvement of the American College of Rheumatology response, compared to placebo. In all drug-treated groups, a greater proportion of patients benefited from moderate or good EULAR responses compared to placebo as well. The study enrolled 226 patients and completed accrual in September. Genmab expects to present full results in the first half of next year.

Meanwhile, news of the GSK deal for HuMax-CD20 hit just as the FDA and Genentech Inc. disclosed a physician warning about two deaths of patients getting the anti-CD20 antibody Rituxan (rituximab) off label for lupus. They developed a rare brain infection called progressive multifocal leukoencephalopathy, caused by reactivated JC virus, a bug that's present in about 80 percent of adults. Rituxan, marketed in the U.S. by Genentech Inc. and Biogen Idec Inc., is cleared for the treatment of CD20-positive, B-cell NHL and for moderately to severely active RA when other therapies have failed.

Drakeman said the Rituxan subject didn't come up during talks with GSK, and analysts downplayed the warning to doctors. Ren Benjamin, with Rodman & Renshaw, called the news a "headline grabber" but said investors shouldn't worry. The two casualties had longstanding disease with "multiple courses," and PML is a known risk in such patients, and cases have been reported in lupus patients not getting Rituxan, as well as NHL patients who did, Benjamin wrote in a research report.

In the HuMax-CD20 deal, Genmab is keeping "half the value of the product altogether," as GSK takes over the large and costly chore of commercial manufacturing. GSK also holds an option on Genmab's CD20 UniBody, a stable, smaller antibody format, which might complement the domain-antibody purchase made earlier this month. The pharma firm agreed to pay £230 million (about US$451 million) in cash for Domantis Ltd., a privately held UK firm whose work is all preclinical. GSK also entered a potential $1.2 billion deal with EPIX Pharmaceuticals Inc. to develop drugs for Alzheimer's disease and others. And just last week, GSK said it agreed to pay about $54.8 million for Praecis Pharmaceuticals Inc., getting the early stage cancer drug PPI-2458, a methionine aminopeptidase-2 inhibitor, as part of the deal.

GSK's purchase of equity in Genmab might have brought another part-owner to mind: collaborator Medarex Inc., out of which Genmab spun in 1999. Medarex held just less than 20 percent of Genmab, and toward the end of the year lost its CEO Donald Drakeman, husband of Genmab's Lisa Drakeman.

Donald Drakeman stepped down as president and CEO of Medarex after an internal probe of stock-option accounting practices found backdating (that is, dating of stock-option grants when shares were trading low), but no fraud or willful misconduct by management. During the summer, Medarex got a federal grand jury subpoena regarding stock options, and the SEC had informally inquired.

Medarex is "in the process of restating its annual and interim financial statements for the periods from 2000 through 2005 and for the quarter ended March 31, 2006," according to paperwork filed with financial regulators. "This work is ongoing," and the company will not be able to file its quarterly financials until it's finished. A decision on whether the company will be de-listed for failing to file reports is pending.

Genmab has fared better. Included in the GSK deal is an option to co-promote HuMax-CD20 in a targeted oncology setting in the U.S. and Nordic countries. If Genmab takes the option, the firm also will get options to co-promote GSK's radiolabeled monoclonal antibody Bexxar (tositumomab, iodine-131) for NHL and Arranon (nelarabine) for T-cell leukemia in the U.S., as well as Atriance (nelarabine) for that indication in the relevant Nordic territories.

Also in December, Genmab unveiled its fully human HuMax-ZP3 antibody program, targeting a protein that is overexpressed in colon, pancreatic and prostate cancers but is not expressed in such vital organs as the brain, heart, liver and lungs. The company said preclinical data in immune-deficient mice are encouraging.

But the GSK deal had the biotech world buzzing more. Terms beat even the $2 billion alliance signed in 2001 (and later changed) between ImClone Systems Inc. with Bristol-Myers Squibb Co. to help develop and promote the scandal-ridden colorectal cancer monoclonal antibody Erbitux (cetuximab), which blocks EGFR.

Genmab also aims to partner its HuMax-EGFR (zalutumumab), the antibody that entered a Phase I/II trial in October in combination with chemo-radiation as a first-line treatment for squamous cell carcinoma of the head and neck. Drakeman said "numerous parties" are poking around there, but she declined to provide a timeline for news on the EGFR product.

"Just like [the GSK deal] which came, I think, sooner than people expected it, they can always go in the other direction, too," she said.