National Editor

SangStat Medical Corp. and Abgenix Inc. said they are dropping development of ABX-CBL, an in-licensed murine antibody for steroid-resistant graft-vs.-host disease, based on data showing the treatment fizzled in a Phase II/III trial against an already marketed control drug.

But analysts hadn't figured much into their estimates for either company with regard to ABX-CBL, and neither firm's shares seemed to suffer on a day when the market was generally robust. SangStat's stock (NASDAQ:SANG) closed Tuesday at $7.98 up 15 cents. Abgenix's shares (NASDAQ:ABGX) ended the day at $5, up 20 cents.

Asked what financial hopes Fremont, Calif.-based SangStat had pinned on the product, Bill Martin, director of corporate communications, said: "None."

ABX-CBL was tested against the equine anti-thymocyte globulin Atgam, from Pharmacia Corp., of Peapack, N.J., and the drugs showed a similar survival rate at 180 days. The primary endpoint for ABX-CBL was superior survival in the rather small market - about 2,000 patients per year - of people who develop steroid-resistant GVHD.

SangStat will shut down the ABX-CBL program and focus on its own anti-thymocyte globulin, Thymoglobulin, a rabbit polyclonal antibody already on the market and being developed for bone marrow transplants.

Abgenix, also of Fremont, will continue developing ABX-EGF, being developed in a 50-50 partnership with Thousand Oaks, Calif.-based Amgen Inc., now in a Phase II program to treat epidermal growth factor-dependent cancers. Data are expected in May for colorectal cancer. Further back in the pipeline, the company has ABX-MA1 in a Phase I dose-escalation study to treat metastatic melanoma.

Thymoglobulin, viewed as SangStat's main value driver, was approved in 1998 for treatment of renal transplant acute rejection in conjunction with concomitant immunosuppression. In North America, the drug racked up $55.2 million in sales last year. Globally the number was $80 million.

"We're the market leader by a good stretch, with 50 percent of the dollar market and 35 percent of the patients," Martin told BioWorld Today, noting four other drugs are competing in the immunosuppression indication.

Thymoglobulin already is used as a prophylactic treatment in bone marrow transplants in Europe, where that makes up the majority of its market in some countries, Martin said.

A Phase II study in that indication will start mid-year, and will probably last one year.

"It will be open label, so we'll have an idea how well it's working before the trial is up," he added.

The company also has Gengraf cyclosporine capsules for prophylaxis of organ rejection in kidney, liver and heart allogeneic transplants; Celsior, launched in the U.S. in 1999 as a flush and cold storage solution for cardiac transplantation; and Lymphoglobuline, sold outside the U.S. for treatment of aplastic anemia and GVHD.

Earlier this month, SangStat raised $77.6 million in a public offering of 4.5 million shares at $17.25 each. The company said it would use $16 million to pay off a loan, and the rest would go to corporate purposes. (See BioWorld Today, February 6, 2003.)

The company is still searching for a CEO, and litigation is ongoing with Novartis AG, of Basel, Switzerland, which claims infringement by Gengraf and was awarded $5 million in damages over the summer but wants SangStat's drug taken off the market.

SangStat has a co-promotion a distribution deal for the drug with Abbott Laboratories, of Abbott Park, Ill., and the latter company was the target of Novartis' lawsuit.

"Abbott had to pay [the $5 million]," Martin said. "We're not named in the lawsuit, so we don't' really care what happens, except if the product is removed from the marketplace."

If that happens, SangStat could lose around $35 million in revenue, although "Gengraf has very little impact on the bottom line" as compared to Thymoglobulin because of the differing price margins at which the drugs are sold, Martin said.

Removal of Gengraf cyclosporine capsules from the market would be "worst case," he said.

"The judge would have to uphold the jury verdict, grant the injunction [filed by Novartis to stop sales] and refuse to stay the injunction during the appeals process," Martin said.

Several years ago, SangStat settled with Novartis on a patent-infringement case related to the marketing of the former's liquid cyclosporine product, SangCya. Terms were not disclosed but the agreement was said not to be financial since sales of the liquid formulation were low. (See BioWorld Today, July 31, 2000.)

While the Gengraf case is being decided, SangStat is proceeding with a Phase IIa study of RDP58 for Crohn's disease and ulcerative colitis. RDP stands for "rationally designed peptide," Martin said of the internally developed product.

"We've got all kinds of animal data, and this will be the first indication of clinical efficacy in humans," Martin said. The study is expected to finish at the end of this quarter, with data reported shortly afterward.

"This will be a pivotal event for the company," he said. "I can't emphasize the importance of RDP58 enough. It's what all investors will be watching."

Jean-Jacques Bienaime, who had been CEO of SangStat for four years, left in November to become president and CEO of Genencor International Inc., of Palo Alto, Calif., and SangStat board member Richard Murdock took over as interim chairman, president and CEO.

"An active search [for a permanent CEO] is under way at the board level," Martin said. "I wouldn't rule Rick Murdock out," he added, noting that Murdock was previously CEO and president of CellPro Inc., of Bothell, Wash. A decision is expected "hopefully in the next couple of months," Martin said.