By Matthew Willett
Protein Design Labs Inc. entered a collaboration with Exelixis Inc. to discover and develop antibodies for use in cancer diagnosis, prevention and treatment.
PDL, of Fremont, Calif., will make a $30 million investment in Exelixis, of South San Francisco, through the purchase of a note convertible within a year into Exelixis stock. PDL also will provide $4 million in annual research funding for two or more years.
The convertible note bears an interest rate of 5.75 percent, according to Exelixis¿ chief financial officer, Glen Sato, which is exercisable at a 10 percent premium to market value as measured by the 20-day average share price prior to the sale.
Sato said the deal¿s structure, which differs slightly from the typical joint venture or milestone-and-royalty structure, aims to reduce Exelixis¿ risk.
¿We think that this really is a unique deal, in the antibody space in particular,¿ Sato told BioWorld Today. ¿Most other antibody deals are sweat equity deals where no one puts up any money up front. Somebody puts up a target. In this deal, PDL has seen our technology and they feel we¿ll put up a target early in the relationship. They think the robustness of our screens and our biology is valuable, and that our ability to deliver targets is unique. We¿re ready to hit the ground running.¿
PDL¿s vice president of business development and corporate communication, Robert Kirkman, said the deal represents PDL¿s first foray into dealing with a genomics company for targets.
¿It is PDL¿s view that the best way to take advantage of the genomics opportunity for target development is to establish a small number of really in-depth collaborations where two companies work together in a serious way with a common set of objectives to develop therapeutic products,¿ Kirkman told BioWorld Today. ¿We¿re anxiously looking forward to what is our first partnership with a genomics company, to having that kind of relationship that we can build on, and to going forward. That¿s why we¿re interested in cementing a relationship with what has the potential to be a significant equity investment in Exelixis and why we¿ll provide some funding.¿
Exelixis will retain small-molecule therapeutic development rights associated with targets it provides PDL, Sato said. ¿We¿re very excited about this because we¿re doing small-molecule work in this area, and we haven¿t given up any small-molecule rights,¿ he explained. ¿What it does, to borrow a phrase, is increases our shots on goal, our opportunities with respect to cancer products.¿
The agreement calls for a decision immediately prior to submission of an investigational new drug application, he added, about whether Exelixis will become an equal cost- and revenue-sharing partner on the further development of a PDL-created antibody. If Exelixis opts not to join PDL in the further development of resulting antibodies, Exelixis is entitled to milestone payments and royalties.
¿That¿s the area we believe we¿re building expertise in, and we feel we¿re adding value to the company,¿ Sato said. ¿We felt the antibody space is something we¿d be late to the game with, frankly, so for us to partner with a leader in that space, and one that¿s very actively interested in having us be a significant partner, gives us an opportunity to leverage moving into the antibody space quickly without having to move into antibodies ourselves.¿
Sato said the agreement calls for Exelixis to give PDL a look at all the targets it generates through a prescribed set of screens. That makes the scope of the collaboration large enough to run the gamut in oncology.
¿The way the exchange of technology works is there won¿t be a specific disease area. We¿re not restricted that way.¿ Kirkman said. ¿We¿re looking here at the regulation of cell growth, cell proliferation and apoptosis, so that the areas really stretch across all of oncology and even, conceivably, some targets will have indications beyond oncology.¿
Kirkman said PDL is continuing at a good pace in other areas as well, with Zamyl, formerly SMART M195, having just completed patient entry in a Phase III trial in acute myeloid leukemia and primary endpoint data will be available by the end of this year.
¿We¿ve got Remitogen for non-Hodgkin¿s lymphoma in Phase II, and although it¿s not a direct treatment we¿ve got Nuvion for graft-vs.-host disease following bone marrow transplant. We have a substantial pipeline in autoimmune disease and inflammatory disease, and we have Nuvion in a trial for psoriasis. There¿s what we call SMART anti-gamma interferon in a Phase I/II for Crohn¿s disease and anti-IL-4 in a Phase I/II trial for asthma.¿
Sato said the Exelixis program in small-molecule discovery is proceeding as well, bolstered by its acquisition of Artemis Pharmaceuticals GmbH, of Cologne, Germany, for $23.1 million in stock last month. (See BioWorld Today, April 24, 2001.)
¿The acquisition of Artemis not only gives us additional targets that are validated with respect to cancer, but also expedites the angiogenesis program,¿ he said. ¿We¿re seeing the robustness of the programs we¿ve got coming behind the cancer program. The angiogenesis and inflammatory disease programs are coming along so well there¿s a greater willingness to partner out the more mature programs like cancer. We have so many targets, and with having enough targets to do our own small-molecule development, the cash also puts us in a position to put some programs to a more mature state, and talk further to companies where we can get more co-development and profit-sharing and, perhaps, as with PDL, carry less development risk.¿
Exelixis¿ stock (NASDAQ:EXEL) fell 44 cents Wednesday, closing at $15.50. PDL¿s shares (NASDAQ:PDLI) fell $6.77, closing at $72.08.