By Brady Huggett

Xenerex Biosciences, a subsidiary of Avanir Pharmaceuticals Inc., acquired patent rights from IDEC Pharmaceuticals Corp. to reduce Xenerex's chances of contending with a surprise rival.

IDEC assigned its ownership in U.S. patent No. 5,958,765 to Xenerex for the generation of fully human monoclonal antibodies using human spleen cells grafted into severe combined immunodeficient (SCID) mice. IDEC will receive a 5 percent ownership interest in Xenerex and royalties on sales resulting from use of the patent. IDEC may not use the patented technology to provide or sell antibody-generation services directly to third parties, but it does retain a limited right to use the technology to generate human antibodies against its own disease targets.

"Xenerex is based on three pieces of intellectual property," said David Hansen, president and chief operating officer at Xenerex, of San Diego. "The first two we own outright. This patent that we are talking about is one that was jointly invented and assigned to both Avanir and IDEC. Both companies had an undivided interest in the patent and both could use it and go forward. The key for Xenerex was to make sure we had control."

And it got it, along with a little security.

"We've always had an ownership position on the patent, but it was shared," Hansen said. "Someone else could come up and license it from IDEC. Our fear was we would not have tied all this up and somewhere down the road we would have an unanticipated competitor."

IDEC, of San Diego, has worked with the patented technology in the past, but has based its current business on a separate core of technologies, Hansen said. The 5 percent interest in Xenerex places IDEC in a position somewhere behind the largest shareholder and parent, Avanir, of San Diego, which spun out Xenerex in August. (See BioWorld Today, Aug. 21, 2000.)

"We announced our formation in late August and we moved into our facility in September," Hansen said. "That gave us all the space we needed."

Since then, Hansen said Xenerex has focused on a variety of demonstration projects with infectious disease and working with human soluble proteins and human cell surface proteins. The company has been in discussions with potential collaborators interested in a human antibody generation effort and has made it public knowledge that the plan is to bring in collaborators by the end of the year.

"That is certainly possible and we are working toward that goal," Hansen said. "We'll be close if not right there."

Avanir recently underwent a product launch for Abreva, a cold-sore medicine approved by the FDA in July. Avanir is expected to release its first-quarter financials soon, but so far so good, said Hansen. (See BioWorld Today, July 27, 2000.)

"Both [partner] GlaxoSmithKline and Avanir are pleased with the launch and results to date," he said.

For Xenerex, while the patent ownership gives peace of mind, it continues to look ahead.

"We are very active in acquiring additional technologies and we have identified a variety of technologies that are complementary to ours and we are working hard to bring them in-house," Hansen said. "[Patent ownership] is a good first step and our role is to follow it up with several other significant steps. We are on our way." n