BioWorld International Correspondent

LONDON - Cambridge Antibody Technology Group plc emerged the all-around winner in the first round of its legal fight to force Abbott Laboratories to give it a bigger share of revenue from the blockbuster drug Humira.

If the ruling stands, CAT's finances will be transformed, as the royalty rate from the rheumatoid arthritis drug - forecast to sell more than $1 billion in 2005 - rises from 2 percent of net sales to 5 percent.

Shares in Cambridge-based CAT were suspended pending the judgment on Monday morning, but rose by 17 percent to £7.39 when CAT's victory was announced.

Abbott lodged an appeal that will be heard by late January.

At issue was whether Abbott was entitled to reduce the royalty rate paid to CAT to meet payments due to other companies that have technology featured in Humira, an anti-TNF antibody. CAT argued that the royalty-sharing provision of the 1993 deal (which was updated in 1995) referred only to any third-party rights covering CAT's antibody libraries and phage display technology.

CAT also said that if Abbott was allowed to reduce the royalty rate, then the agreement did not reflect the intention of the signatories at the time of signing and should be amended.

Justice Laddie pulled no punches in his judgment, saying, "I have come to the conclusion that the construction advanced by CAT is correct and that the construction advanced by Abbott does violence to the language of the agreements, renders them obscure and makes little or no commercial sense."

He added that even if he had not found in CAT's favor in relation to the agreement as it stands, he would have ordered its rectification to reflect the original intention that CAT's royalty-sharing obligations should only extend to any third-party claims over the CAT technology, of which there are none.

Laddie concluded: "Abbott was in error when it made its first royalty payment to CAT calculated on the basis that only 2 percent of net sales was due. It should have calculated on the basis of the full royalty of just over 5 percent and should have paid and continued to pay CAT accordingly."

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