By Chris Delporte

AltaRex Corp. said it plans to form a joint collaboration with Epigen Inc. to develop antibody-based treatments for up to 12 cancers associated with the human carcinoma antigen, or HCA.

¿We signed a memorandum of collaboration and expect that to lead quickly to more formal terms of a joint collaboration,¿ Bob Newman, AltaRex¿s vice president of business development, told BioWorld Today. ¿Terms are still to be negotiated.¿

The companies expect to enter a definitive agreement within 60 days and to begin testing within six months. AltaRex and Epigen both will actively and equally participate in the research, he said.

Separately, AltaRex closed a previously disclosed warrants financing of C$8.4 million (US$5.5 million).

Newman said the agreement with Epigen will be restricted to joint development and no money will be exchanged. Any technology developed as a result of the research would be shared by both companies, as would any revenue resulting from the collaboration. Any intellectual property created will be retained by the developing company.

HCA, Epigen¿s proprietary, cancer-specific antigen that appears in circulation in the early stages of the disease, is associated with the majority of epithelial cancers, including prostate, ovarian, breast and non-small-cell lung cancers. According to AltaRex, that makes it a compelling target for its antigen-targeted antibody therapy approach.

Epigen brings HCA, and a series of foreign monoclonal antibodies specific to HCA, to the collaboration. AltaRex offers its proprietary dendritic cell assay, which will be used to quickly evaluate which, if any, of Epigen¿s foreign antibodies are capable of inducing beneficial immune responses, especially T-cell responses, against the target antigen HCA. The assay, according to the company, has been validated by successful results reported for its OvaRex, BrevaRex and ProstaRex antibodies. Both companies said a foreign antibody against HCA could elicit a ¿multi-epitopic¿ response and alter immunity.

On Tuesday, Waltham, Mass.-based AltaRex received a U.S. patent for its multi-epitopic treatment method, which involves targeting a single epitope on an antigen, which then results in an immune response to multiple epitopes. The method of treatment covered by the patent would be the same one used by the anti-HCA.

¿The difficulty with many tumor-associated antigens is that specificity is often inadequate early in the course of the disease,¿ Christopher Nicodemus, senior vice president of clinical research and development for AltaRex, said in a prepared statement. ¿What makes HCA so exciting to AltaRex is that it appears to be uniquely associated with malignant forms of multiple tumor types and it is detectable with disease specificity early in the course of the disease.¿

AltaRex specializes in the research, development and commercialization of antigen-targeted, antibody-based cancer therapies, using monoclonal antibodies as immunotherapeutic agents for the treatment of certain late-stage cancers. Epigen, based in Rochester, N.Y., is a privately held company that develops cancer diagnostics and therapeutics. The company¿s development program centers on the use of HCA.

In the financing, AltaRex placed 3 million special warrants resulting in gross proceeds of C$8.4 million. HSBC Securities (Canada) Inc. is acting as agent for the company in the financing. Upon filing with various regulatory agencies in Canada, each of the warrants, priced at C$2.80 (US$1.84), will entitle the holder to acquire one common share of AltaRex with no additional consideration. Shares of AltaRex closed Wednesday at C$3.60, down C20 cents.

The sale of the warrants will be used for working capital purposes and for the continued funding of OvaRex, which is in late-stage clinical development for the treatment of ovarian cancer. Proceeds from this private placement came from the United States, Canada and Europe, and included Dompe Farmaceutici SpA, AltaRex¿s partner for commercialization of OvaRex in Italy, Spain, Portugal and other European countries, and FAES SA, of Spain. FAES will commercialize OvaRex on behalf of AltaRex and Dompe in Spain and Portugal. The equity investment made by FAES satisfies Dompe¿s milestone obligation to AltaRex upon commercialization of OvaRex in those two countries. Dompe maintains an option to purchase an additional US$5 million in AltaRex equity in a private placement concurrent to a future public offering of common shares in the U.S.

AltaRex currently has 26.4 million shares outstanding. Conversion of the warrants would bump that number up to 29.4 million. The warrants can be converted into common stock once the prospectus has cleared, which should take anywhere from one to two months. Dompe has roughly a 13 percent stake in AltaRex. FAES holds less than 10 percent.

Commercialization of OvaRex in the United States is expected in 2002, AltaRex said. The company said it would file its biologics licensing application with the FDA on a rolling basis beginning in the fourth quarter of this year, continuing into early 2002.

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