BioWorld International Correspondent

LONDON - Peace has broken out in long-running wars over antibody phage display patents, with Cambridge Antibody Technology Group plc granting licenses to MorphoSys AG and Crucell NV, and all existing litigation between the companies being withdrawn.

CAT has defended sternly its antibody phage display patents in the courts, both in the U.S. and Europe, over the past five years, but last month said it would in the future put the emphasis on licensing, rather than litigation.

CAT CEO Peter Chambre told BioWorld International, "We said in November, when we announced our annual results, we wanted to clean up our IP [intellectual property] process. Our objective is to gain a small share of as many successful antibodies as possible."

CAT's most heated IP dispute was with MorphoSys, of Munich, Germany. The two have filed claim and counterclaim over CAT's phage display patents and MorphoSys' HuCAL antibody libraries. CAT's annual results for the year ended Sept. 30 showed fees for patent litigation were £1.9 million (US$3 million), while in 2001 CAT paid £2 million in legal fees to protect its patents.

Under the deal with MorphoSys, CAT will receive an annual payment of €1 million over the next five years and an equity stake in MorphoSys of 588,160 shares. In addition, the UK company will be entitled to milestone and royalty payments for products developed using previous versions of MorphoSys' HuCAL antibody libraries.

In return, MorphoSys will be free to develop and commercialize its HuCAL technologies. CAT will not sue MorphoSys over current HuCAL libraries, or any future development, and MorphoSys will receive a license from CAT covering previous HuCAL libraries. MorphoSys has the right to buy out its obligations for a fixed amount during the term of the agreement.

Chambre said, "We have previously stated that we were prepared to work with MorphoSys to settle the actions on the right terms and this agreement puts an end to the distraction to both parties caused by litigation. In addition, in reaching this agreement CAT shareholders will benefit from the future growth of MorphoSys' business."

Simon Moroney, CEO of MorphoSys, said the agreement will increase MorphoSys' deal flow. "Settlement also brings an end to investment of time and money in lawsuits. We are delighted to put this dispute behind us on very acceptable terms and to cement the agreement with an equity participation from CAT."

Meanwhile, Crucell, of Leiden, the Netherlands, has been granted a worldwide license to all CAT's antibody phage display technologies. Chambre said that covers an undisclosed number of projects, "including things they [Crucell] are working on, and things they intend to work on in the future." Under some circumstances CAT, based in Cambridge, UK, will have the opportunity to buy into Crucell's programs at a later date.

Under the agreement, CAT will receive an initial license fee from Crucell. In return, Crucell and its partners will be free to develop and commercialize human antibody products using its MAbstract technology, under CAT's patents. CAT will receive milestones and royalty payments for any antibody products that Crucell, or its partners, develop that are derived from Crucell's MAbstract technology, or other technology involving phage display.

In another move, CAT agreed to a cross-licensing agreement with XOMA Ltd., of Berkeley, Calif., for antibody-related technologies. CAT and its collaborators receive the right to use XOMA antibody expression technology for developing products based on CAT's phage display technology. In return XOMA can use CAT's phage display libraries for target discovery and research, and will pay a license fee if it develops any therapeutics from antibodies derived from CAT's libraries.