Marking its first out-licensing deal to date, Canadian company Arius Research Inc. gave human disease development rights to Genentech Inc. for a family of novel cancer antibodies.

The deal includes a lead antibody. Toronto-based Arius will receive an up-front licensing fee, as well as potential milestone payments based on clinical development progress and royalties on net sales of any products. Specific financial terms were not disclosed.

Arius President David Young was not available Wednesday, and other company officials declined comment. But investors liked the deal; the company’s stock (CDNX:ARI) shot up more than 30 percent, or C29 cents, to end the day at C$1.24 (US$1.06).

South San Francisco-based Genentech is assuming all development and commercialization costs. The company was selected to take the program forward because of its "expertise with antibodies for cancer," Young said in a statement.

"We’re undertaking this deal to expand Genentech’s oncology pipeline and to explore the potential clinical utility of the antibodies," said Caroline Pecquet, associate director of corporate communications at Genentech.

She could not say how soon something might reach the clinic. "It’s too early to discuss any timelines," she told BioWorld Today. But the program will provide Genentech with multiple shots on its goal, helping the company to "augment our early stage research pipeline in oncology."

The antibodies were developed from Arius’ FunctionFIRST platform. They have demonstrated antitumor activity in animal models of several human cancers, and they have been shown to recognize important cancer targets. ARIUS is researching treatments for the most common types of cancer, including those with significant unmet medical need. It is a disease that affects about 1.6 million new patients each year in North America, according to the American Cancer Society and the Canadian Cancer Society. The eight cancer antibodies on the market had a worldwide value of close to $6.3 billion in 2005, the company said. That value is expected to jump to $16.7 billion by 2008.

Founded in 1999, Arius has developed its FunctionFirst platform to derive monoclonal antibody drug candidates from human tumor tissue. The company selects the naked antibodies for their ability to selectively kill cancer cells using functional screens. It has assembled a pipeline of more than 300 functional MAbs, which could be used for commercial collaborations, out-licensing or in-house development. As for its intellectual property, Arius has three issued U.S. patents and more than 30 patents pending.

The company’s long-term vision is to deliver personalized therapy by matching antibodies to the antigenic characteristics of a patient’s tumor, thereby increasing efficacy and reducing side effects.

While the company has ongoing research partnerships with biotechnology and drug development companies, the deal with Genentech is its first out-licensing development and commercialization agreement and "represents a significant milestone under the Arius business model," Young said.

The company has 19 full-time employees and has raised C$42 million since inception through private rounds and public offerings.