BioWorld International Correspondent

PARIS - Innogenetics NV is paying up to nearly $100 million to take over the therapeutic vaccine program of Genencor International Inc., and will henceforth be responsible for the clinical development and worldwide commercialization of all products arising from the programs.

The deal gives Innogenetics, of Ghent, Belgium, access to the technology platform and intellectual property rights of Palo Alto, Calif.-based Genencor, as well as licenses for therapeutic and prophylactic vaccine applications for hepatitis B virus, human papillomavirus and hepatitis C virus.

"This agreement underscores our ability to deliver on our promise of creating significant value in our health care business in a relatively short period of time," Genencor Chairman, CEO and President Jean-Jacques Bienaimé said in a press release. "We're pleased to put this valuable program in the hands of a solid company like Innogenetics with commercial experience in viral disease markets."

The acquired product portfolio consists of a clinical vaccine candidate for HBV, a preclinical viral boost candidate for HBV and a research-stage lead compound for HPV. Genencor filed an investigational new drug application for its HBV vaccine last year, and recently began a Phase I trial in the U.S. Innogenetics will assume the trial's management after a short transitional period.

In addition, Innogenetics acquired a complementary discovery platform for future HCV vaccine products and exclusive access to a broad portfolio of patented cytotoxic T-lymphocyte epitopes and licenses covering applications in the areas of HBV, HPV and HCV. Those immunotherapeutic tools were developed by another U.S. company, San Diego-based Epimmune Inc., which partnered with Genencor in the development of therapeutic vaccines and now will collaborate with Innogenetics.

The deal provides for Innogenetics to pay Genencor up-front license fees totaling $10 million, payable in two installments over the next 12 months. After that, Genencor could receive up to $5 million in various Phase II development milestones. Finally, should all Phase III programs prove successful and result in regulatory approvals in the U.S. and Europe, Innogenetics would make additional payments to the U.S. company of as much as $81.5 million. In addition, Genencor would receive royalties on product sales.

As part of the deal, Innogenetics entered an 18-month collaboration with Epimmune running to September 2005. Innogenetics will pay Epimmune milestones on the successful completion of clinical development phases, plus royalties on any product sales, in accordance with Epimmune's original license agreement with Genencor.

The collaboration dates to July 2001, when Genencor gained an exclusive license to Epimmune's Padre and epitope technologies for vaccines to treat or prevent HBV, HCV and HPV. In connection with the initial collaboration, Genencor paid an up-front license fee and made a 10 percent equity investment in Epimmune's common stock.

As part of the latest accord, Genencor agreed to not sell any Epimmune common stock for 12 months, and for a further 12-month period it will be subject to certain trading and volume restrictions.

Under the original agreement, Epimmune may receive about $60 million in payments, including amounts already paid by Genencor and future amounts payable by Innogenetics.

According to Innogenetics' chief therapeutics officer, Guy Buyens, the acquisition will help the company meet its "objectives of initiating the clinical evaluation of at least two new therapeutic vaccine candidates in infectious diseases by 2006." He added that the additional programs would "be run within Innogenetics' 2004 expenditure guidelines."

For his part, CEO Philippe Archinard stressed the access Innogenetics is gaining to Epimmune technology, providing it with a "unique engine for the development of future-generation infectious disease vaccines." He also welcomed the financial nature of the deal, insofar as it "links most future milestone obligations to successful completion of Phase III clinical studies and regulatory approval of the developed products."

Innogenetics is engaged in both the production of specialty diagnostics and the development of therapeutics. Its lead therapeutic product is a vaccine for hepatitis C, a pathology in which it has extensive experience since it has developed an HCV genotyping product using its Line Probe Assay technology, a multiparameter assay based on the reverse hybridization principle that allows the simultaneous detection of mutations and genetic variations in samples.

The HCV vaccine yielded "highly encouraging" results in a Phase IIa trial completed last spring, and an extension study is under way to evaluate the vaccine's long-term benefits. In addition, a Phase IIb study started in several centers around Europe at the end of 2002 to test the vaccine on 150 chronic hepatitis C patients, and that is due to be completed by the end of 2004.

Innogenetics also is developing a prophylactic vaccine for hepatitis C, which is at the preclinical stage. The company's strategy is to partner out prophylactic vaccines at an early stage of development.

In December, Innogenetics netted €23 million through a public share offering from which it had hoped to raise €39 million. The company generated revenues of €72.5 million in 2003 while posting a net loss of €14 million. While its specialty diagnostics division earned an operating profit of €7.1 million, its therapeutics division showed a loss due to research and development outlays of €19.8 million.