West Coast Editor
Genentech Inc. exercised an option to stretch its 1999 licensing deal with Abgenix Inc. for three more years, buying an undisclosed quantity of the antibody company's shares through a private placement.
The extension helps Fremont, Calif.-based Abgenix in its march toward cash-flow-positive status by the year 2008-2009, said Ami Knoefler, the firm's director of corporate communications and investor relations. Genentech's stock buy is less than 1 percent of Abgenix's outstanding shares.
"Further disclosures in our regulatory filings in the future" may provide more precise details on the Genentech pact, Knoefler added.
Abgenix's stock (NASDAQ:ABGX) closed Monday at $8.65, up 52 cents. South San Francisco-based Genentech's shares (NYSE:DNA) soared for a different reason, ending the day at $55, up $10.92, or 24.8 percent, on favorable news that broke late in the day. The company said its approved colon cancer drug Avastin (bevacizumab) also increased survival in some lung cancer patients.
The original six-year deal for Genentech to use Abgenix's XenoMouse technology to make fully human antibodies covered 10 antigen targets and was valued at $120 million. As part of the agreement, Genentech bought 495,356 shares of Abgenix stock for $8 million, pledging up to $8 million per target in up-front licensing fees and milestone payments, plus any royalties for marketable products. (See BioWorld Today, Jan. 28, 1999.)
"Typically, the development milestones from these types of deals are in the $7 million to $10 million range over the life of the collaboration," Knoefler said, noting that Abgenix has similar deals with Rockville, Md.-based Human Genome Sciences Inc.; CuraGen Corp., of New Haven, Conn.; Pfizer Inc., of New York; and Amgen Inc., of Thousand Oaks, Calif. Eight products are in the works as part of licensing deals, Knoefler said.
The Pfizer agreement includes several products in the clinic, including one in Phase II, and Amgen has AMG 162 undergoing Phase III trials. In September, Amgen reported at the American Society of Bone and Mineral Research that twice-yearly injections of AMG 162 significantly increased bone mineral density compared with placebo after 12 months, as reported earlier. A biologics license application for panitumumab is expected later this year.
Also with Amgen as part of a co-development deal is Abgenix's lead antibody candidate panitumumab, which targets the epidermal growth factor receptor. Also known as ABX-EGF, the compound is in pivotal trials as a third-line treatment for metastatic colorectal cancer.
"That's a 50-50 deal," Knoefler pointed out, adding that Abgenix has more such deals fueling the early stage pipeline.
"Our strategy has been to focus in recent years in developing our proprietary portfolio, and we define that as including the 50-50 deals," she told BioWorld Today.
The goal of being cash flow positive by 2008-2009 largely is contingent on panitumumab, Knoefler said, noting that in general "a lot of it depends on the partners. How significantly they play to our revenues depends on their success."
Abgenix ended 2004 with $416.3 million in cash, cash equivalents and marketable securities.