BioWorld International Correspondent

Xenova Group plc signed a deal worth up to $63 million that gives Genentech Inc. rights to Xenova’s preclinical OX40 program to develop drugs targeting disorders of the immune system.

Genentech will pay license fees of up to $5 million during the first year of the collaboration, and Xenova could see up to $58 million in milestones based on the clinical development and commercialization of one product, plus royalties on any sales. South San Francisco-based Genentech has an option to develop a second product and would pay milestones and royalties on that product as well.

Xenova CEO David Oxlade said, “This deal is a license of rights to develop products and does not include products as such. The terms, for a preclinical deal, are extremely attractive. We couldn’t ask for a better partner. Genentech is highly experienced in the development of biologicals for this kind of target.”

Genentech will fund all future development within the scope of the agreement and will carry out the development work, the regulatory filings and the manufacture and sale of any products worldwide.

“The molecules provide intriguing drug targets that have applications in the autoimmune and inflammatory disease areas,” said Sabrina Johnson, director of corporate affairs at Genentech. “Autoimmune and inflammatory disease are areas of increasing focus for us.”

OX40 and OX40 Ligand are interacting cell surface proteins linked to the induction and regulation of immunity, acting as co-stimulating molecules in the initiation of the immune cascade. They have the ability to regulate the T-cell/antigen-presenting cell interaction, thereby modulating signals that are central to a range of disease processes.

Xenova, of Slough, UK, retains the rights to use OX40 in oncology. In addition, the company has an existing relationship with Celltech Group plc, also of Slough, under which Celltech is developing an anti-OX40 antibody for the treatment of immune diseases, with Xenova retaining rights.

Genentech and Xenova are setting up a joint research committee to oversee the work.

“In immunology, Genentech is interested in downregulation of OX40, whilst in cancer we want to upregulate it,” Oxlade said. “Genentech will do its own discovery and development, but I’m sure the two avenues of research can learn from each other.”

Xenova has published data on preclinical candidates, but Oxlade said it will be one to two years before the cancer program reaches the clinic.

This is the third sizable deal Xenova has signed in the past eight months and the fifth since it acquired the OX40 technology in April 2001 through the merger with Cantab Pharmaceuticals plc, of Cambridge, UK. (See BioWorld Today, Feb. 21, 2001.)

“We have done deals with a total potential value of more than $300 million in the last eight months, and this one in OX40 highlights the value we acquired with Cantab,” Oxlade said.

Genentech has been busy as well and certainly no stranger to in-licensing. On Monday, the company said it and Seattle Genetics Inc. formed a potential $50 million deal giving Genentech access to Seattle Genetics’ antibody-drug conjugate technology. Genentech said it intends to apply the technique in cancer, but also it could be applied in immune disorders. Genentech’s product pipeline includes Rituxan, developed with IDEC Pharmaceuticals Corp., of San Diego; Tarceva, developed with OSI Pharmaceuticals Inc., of Melville, N.Y.; and Xanelim, developed with XOMA Ltd., of Berkeley, Calif. (See BioWorld Today, April 23, 2002.)

“We have a very busy business development group and we are considered the partner of choice,” Johnson said. “We are constantly looking for partnerships that make strategic sense for Genentech. Even if you look back over the last couple of years, it’s been a key part of our strategy to look at in-licensing and business development deals.”

In February, Celltech Group and Seattle Genetics Inc. entered into a multiyear research collaboration to use Seattle Genetics’ antibody-drug conjugate technology Celltech’s antibody fragments, initially for immunological targets. (See BioWorld Today, March 29, 2002.)

In December, Xenova licensed its topoisomerase program for the treatment of solid tumors to Millennium Pharmaceuticals Inc., of Cambridge, Mass., for an up-front payment of $11.5 million, research and development funding of $20 million, plus milestones and royalties. Before that, QLT Inc., of Vancouver, British Columbia, took rights to Xenova’s multidrug-resistance modulator in a deal with a headline value of £75 million (US$66.6 million).

Genentech’s stock (NYSE:DNA) fell 42 cents Tuesday to close at $37.58. Xenova (NASDAQ:XNVA) gained 86 cents to close at $9.35.

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