In its largest collaboration to date, Medarex Inc. formed a global alliance with Pfizer Inc. worth a potential $510 million for the discovery and development of up to 50 antibody products over 10 years.
The company's stock jumped 14.8 percent on Monday, following the news.
"It just confirms the importance of monoclonal antibodies to the future of the pharmaceutical industry that Pfizer has entered into this broad collaboration," said Donald Drakeman, Medarex's president and CEO. "And it confirms Medarex's leadership in monoclonal antibody technology that they've chosen us."
Medarex, of Princeton, N.J., plans to use its UltiMAb human antibody technology to create the products to Pfizer's disease-associated targets. The specific disease areas were not disclosed, but Pfizer can choose to identify those targets in any indication over the 10-year term of the collaboration. Medarex acquired its UltiMAb technology in 1997 through its $65 million purchase of Genpharm International Inc. It now has nearly 50 partners surrounding the UltiMAb technology.
"It enables us to create fully human monoclonal antibodies in transgenic mice," Drakeman told BioWorld Today. "And these mice have human antibody-making genes instead of mouse antibody-making genes."
As part of the agreement, Pfizer will make an initial $80 million cash payment to Medarex, and will buy $30 million of Medarex's common stock - about 4.8 million shares - at a premium to the average market price over a two-week period, or $6.21 per share. The company's stock (NASDAQ:MEDX) climbed $1.01 on Monday, to close at $7.84.
Pfizer is responsible for the worldwide development and commercialization of any products that come out of the collaboration. In addition to the $110 million in up-front cash and equity payments, Medarex could receive more than $400 million in research funding, license fees and milestone payments, if all 50 products achieve regulatory approval. Medarex also would receive royalties on commercial sales of the products.
Drakeman said the milestone payments would be in the range of $7 million to $10 million per product, and the royalties in the range of 3 percent to 5 percent, which is typical of what he calls the company's "cash and carry deals."
Separately, the companies nonexclusively cross-licensed certain patents relating to their anti-CTLA-4 antibody programs.
"Both Pfizer and Medarex have issued patents surrounding antibodies to CTLA-4," Drakeman said. "We both have independent antibody programs around CTLA-4, and to eliminate any patent concerns, we have decided to cross-license our patents. That will allow us to both continue to independently develop our products."
Medarex is developing MDX-010, which is in a Phase III melanoma trial, and Pfizer is developing CP-675,206, which is at the Phase II stage for melanoma. While the companies have retained the commercial rights to their separate anti-CTLA-4 products, Medarex has the potential to receive milestone and royalty payments based on commercial sales of any Pfizer anti-CTLA-4 antibody product. Drakeman declined to give ranges for those payments, but said they were "substantial" and higher than the typical cash and carry deals.
The company's mounting interest in CTLA-4 stems from promising clinical data in melanoma and other cancers.
"CTLA-4 is the immune system's emergency brake," Drakeman said. "It tells the immune system to relax, to calm down, and when you're fighting disease like cancer, you want your immune system to remain robustly active. So it's important to be able to block CTLA-4. It's like releasing the emergency brake."
Medarex's UltiMAb technology is used to generate a range of fully human antibody products for the company and its partners. A total of 19 such products are in clinical trials, with the most advanced, MDX-010, in Phase III testing with MDX-1379 for melanoma. MDX-010 also is in Phase II testing for prostate and breast cancer, and in early clinical trials for HIV.
In August, Medarex and the FDA agreed on a special protocol assessment for the pivotal Phase III trial of MDX-010 plus MDX-1379, a gp100 melanoma peptide vaccine in-licensed from the National Cancer Institute. The trial is expected to finish in the first half of 2006. (See BioWorld Today, Aug. 24, 2004.)
Medarex's pipeline also includes Phase II products, MDX-060 and MDX-070, for CD30+ lymphomas and prostate cancer, respectively. At the earlier stage are MDX-214 for EGFR-positive cancers, and MDX-018 for autoimmune disease. Twelve other antibodies in the clinic are partnered with Malvern, Pa.-based Centocor Inc.; Basel, Switzerland-based Novartis Pharma AG; South San Francisco-based FibroGen Inc.; Tokyo-based Kirin Brewery Co. Ltd.; Indianapolis-based Eli Lilly and Co.; and Copenhagen, Denmark-based Genmab A/S, a 1999 spinout of Medarex. Medarex was founded in 1987.
The financial commitments through the Pfizer deal should enable Medarex to advance its own programs more efficiently.
"Our goal has been to aggressively push our portfolio of therapeutic products forward as rapidly as we can," Drakeman said in a conference call on Monday. "The added cash will allow us to maintain that commitment. It will continue to give us the freedom and the flexibility to choose if we want to go into Phase III trials with our products on our own."