BioWorld International Correspondent

Antisoma plc entered a deal with F. Hoffmann-La Roche Ltd. that has a headline value of US$500 million, including up-front payments of $43 million, more than Antisoma's market capitalization of £26.4 million when the markets closed Friday.

The up-front payment includes £4.15 million (US$6.6 million) for nearly 10 percent of Antisoma's equity.

"This is a very big deal for a European biotechnology company," Antisoma CEO Glyn Edwards told BioWorld International. "We are really happy because it is very good for us, and very good for the sector. It shows that biotechnology is undervalued. It should take the focus off share prices and onto the value tied up in products."

Shares in London-based Antisoma rose 121 percent to 28.3 pence on the London Stock Exchange Monday after the broad ranging oncology alliance was announced. At the start of 2002, the shares stood at 38.5 pence.

The deal covers four Antisoma products currently in clinical trials and an option on all compounds that reach the clinic in the next five years. At present Antisoma has six products in preclinical development and if they and the four clinical-stage products all make it to market, Antisoma would receive $500 million in milestone payments, plus sales royalties. "It could be more than that if Roche takes up any options on other products we bring into the company," Edwards said.

In addition, Roche, of Basel, Switzerland, will cover in full the remaining development costs of the lead products: pemtumomab, currently in Phase III for the treatment of ovarian cancer and Phase II for the treatment of gastric cancer, and Therex, an antitumor antibody currently in Phase I. The other two clinical-stage products covered by the deal are TheraFab, in Phase I in treating non-small-cell lung cancer, and DMXAA, a vascular targeting agent that selectively disrupts blood flow through tumor vessels, also in Phase I.

Roche declined to take rights to Angiomab, in Phase I for the treatment of glioma, because the potential market is too small.

"This is a radical deal for us. It changes the complexion of Antisoma and removes a lot of the financial risk," Edwards said.

Antisoma had to swallow hard when it raised £22 million in a heavily discounted rights issue in February.

"The current investment climate is hostile," Edwards said. "This deal is very significant in this respect because it means big pharma is stepping up to the plate. It is a recognition that biotechnology companies do valuable things. Pharma doesn't want to take them over because they recognize this undermines their ability to innovate, but it needs them to stay around to feed their pipelines."

Pemtumomab is currently partnered with Abbott Laboratories, which has to date paid £8.2 million in milestones and part-funded clinical trials. Antisoma said it was exercising its right to end this agreement and issued a notice of termination to Abbott as of Monday.

Edwards said he did not expect any objection from Abbott, nor for the cost of getting back full rights to be significant. Earlier this year the two renegotiated the deal, originally entered in November 1999, to give Antisoma greater rights, in return for taking on all future development costs.

Antisoma, of London, expects to have around £40 million in cash, up from £15.4 million on Sept. 30, once it has paid off Abbott and received the up-front payments from Roche.

Edwards said the company, which has been the subject of takeover speculation for much of this year, will focus on acquiring more products. To date it has sourced compounds from cancer research charities and universities, but Edwards now expects to attract biotechnology partners as well. "I think people will be even happier to do deals with us because we have a strategic relationship [with Roche], which means that if we can prove it is good in Phase II there is a route all the way through to market."