National Editor

Exten Industries Inc. said its wholly owned liver-cell subsidiary, MultiCell Technologies Inc., entered a marketing and distribution deal with XenoTech LLC that means more than $18 million for MultiCell over the next seven years.

Getting over the "major-league hump" of setting up a steady revenue stream will allow the company to focus more on its research into therapeutic liver-derived proteins, said MultiCell CEO Gregory Szabo, noting the company also will advance its stem cell experiments.

Exten, of which Szabo is president, was down to $2,404 in cash in its financial report for the second quarter ending May 31. That report was "prepared assuming that [Exten] will continue as a going concern," according to its text, noting that the firm had operating and liquidity woes.

Under the terms of the marketing agreement, Warwick, R.I.-based MultiCell is giving XenoTech a seven-year exclusive right to distribute globally its proprietary liver cell lines in exchange for $1.5 million up front.

An unspecified portion of that amount is an advance against future royalties, which must total at least $18 million over the life of the deal in order for Lenexa, Kan.-based XenoTech, a provider of products and contract research services to pharmaceutical companies, to maintain exclusivity.

MultiCell's nontumorigenic liver cells let researchers predict how drugs will react in the body. In November 2001, the company entered a collaborative research agreement with Pfizer Inc., of New York, using liver cells to test drug candidates. Financial terms were not disclosed, but the conclusion of the deal had an impact on MultiCell. Total Exten revenues for the second quarter of this year were $63,690, as compared to $276,953 for the same quarter last year.

Making its cultured cells has provided a benefit that MultiCell, with its infusion of cash from the XenoTech agreement, hopes to exploit next: potentially therapeutic proteins.

"When we have taken the media away and analyzed what's in it, we found the cells were creating substantial quantities of proteins in culture - substantial in nanograms, because these were plated cells," Szabo said.

"What we need to do now is ramp up the entire process, put in billions of cells and see what quantity of proteins the cells will do," he added. "We know they're in there, but if the economics don't play, then we don't have anything."

The market opportunity in the making of non-bloodderived complex therapeutic proteins is estimated at $43 billion worldwide in 2004.

"That is the home run," Szabo said.

"Basically, when you inset a gene into a hamster ovary cell and you say, Make Factor VIII [gene],' it comes out as Factor VIII but the post-translations of that protein may not be exact," he said, whereas a human protein such as that made from liver cells would be an exact copy, therefore more natural and less prone to trigger sensitivity reactions.

MultiCell's approach also allows for the production of liver-derived therapeutic proteins and development of adult stem cells that could be used in liver regeneration - a market of about $78 billion worldwide as of 2010, the company said.

"Stem cells, which we think are farther down the road, would replace our immortalized cells," Szabo told BioWorld Today. "Because of resources, we've been focusing strictly on the immortalized cells."

Another subsidiary of San Diego-based Exten, majority-owned Xenogenics Corp., is developing a synthetic bio-liver device, Sybiol, intended to support critically ill patients until a donor is found. Clinical trials are expected to begin in 2004.

Exten's stock (NASDAQ:EXTI) closed Wednesday at 10.5 cents, up 1 cent.