West Coast Editor

The human antibody market, it turns out, is not all about transgenic mice.

Xenerex Biosciences Inc. is teaming up with Schering-Plough Corp.’s subsidiary, DNAX Research Inc., to generate fully human monoclonal antibodies to a pair of target antigens provided by the latter, which will then evaluate them for possible development as drugs.

Under the agreement, San Diego-based Xenerex, a subsidiary of Avanir Pharmaceuticals Inc., gets research fees for the use of its technology, and could get more if DNAX, of Palo Alto, Calif., enters a commercial license deal.

Financial terms were not disclosed, but Patrice Saxon, director of investor relations for Avanir, said, “The model for this type of tools company is that [the partner] generally pays the research costs, in the neighborhood of a couple hundred thousand dollars, to produce the antibodies. The commercialization option is where you start getting your milestone payments,” which “add up in the $7 million to $10 million range,” she said, with royalties generally 3 percent to 5 percent.

Xenerex grafts human immune system cells into severe combined immunodeficient, or SCID, mice, which then are immunized with the target antigen and respond by creating fully human antibodies.

“It’s a mouse without an immune system, and we can put in tonsil cells, spleen cells, lymphocytes,” Saxon said. “We can also use stem cells. It gives us a lot of diversity, to help the antibody response.” The mouse was developed for treating the “bubble boy” disease, also known as SCID.

Last year, Xenerex acquired patent rights from IDEC Pharmaceuticals Corp., also in San Diego, for the generation of fully human monoclonal antibodies using human spleen cells grafted into the SCID mice. IDEC took a 5 percent ownership interest in Xenerex and royalties on sales resulting from use of the patent, with a limited right to use the technology to generate human antibodies against its own disease targets. (See BioWorld Today, Feb. 14, 2001.)

But it was a year and a half ago when Xenerex said it was joining the already-crowded antibody market along with such players as Abgenix Inc., of Fremont, Calif.; Medarex Inc., of Princeton, N.J.; and Cambridge Antibody Technology plc., of Melbourn, UK, aiming to offer a lower-cost alternative and, in some cases, a better one. (See BioWorld Today, Aug. 21, 2000.)

“We’re just following the deal structure that Abgenix and Medarex made popular,” Saxon said, although Xenerex’s methodology and business models are different.

“We can line up 10 different mice and give them 10 different human systems,’ if you will, and boost them all with the antigen,” Saxon told BioWorld Today. “We do that, if we need to. The other thing that’s neat about [the Xenerex technology] is, if at first pass it’s not as specific as we’d like, we can do it as many times as we need to, in order to get the desired result. With the other way, your response is going to be your response because [the mice are] going to have the immune system they were genetically altered to have.”

Xenerex isn’t putting all of its eggs in the deals basket, though.

“We kind of differ there, in that we thought early on we could make way more money off developing a successful product than 30 or 40 of these collaborations. Another drawback to being only a tools company is that you’re at [the partners’] mercy, how quickly they can develop the product.”

Therefore, Xenerex is making forays independently.

“We’ve developed eight antibodies to our own targets, but there’s more to be done before we decide if it’s a viable drug candidate,” Saxon said.

Avanir’s stock (AMEX:AVN) closed Wednesday at $4.74, up 17 cents. Kenilworth, N.J.-based Schering-Plough’s shares (NYSE:SGP) ended the day at $33.85, up 5 cents.