By Matthew Willett and Brady Huggett

Maxygen Inc. entered an $80 million three-year research and development deal with ALK-Abello A/S for recombinant therapeutics for allergy treatment.

The deal, announced after the market closed Thursday, calls for license fees, technology access fees, research and development funding, and potential milestone payments that could total $80 million for Maxygen, of Redwood City, Calif. Maxygen also would receive royalties on product sales.

Further financial details were undisclosed.

The Dutch company ALK-Abello will receive exclusive worldwide rights to commercialize all recombinant human therapeutics developed in the collaboration.

Maxygen CEO Russell Howard and Maxygen President Simba Gill called the collaboration a learning experience, and said what they learn could be applied to other projects.

"This is a really exciting opportunity because the technology of MolecularBreeding is really ideal for creating novel recombinant allergy therapeutics," Howard told BioWorld Today. "ALK-Abello is the premier company worldwide for manufacturing and clinical testing of allergy therapeutics, and they've proven in the clinic and on the market that they can treat allergic disease, not just treat the palliative, or the symptoms, of allergic disease."

Using allergens as immunomodulators could revolutionize the allergy industry, and other industries, Howard said.

"One thing that's also very exciting is the learning spirit of this relationship," Howard said. "These are approved drugs that alter the immune system and the immune response. ALK-Abello is interested in the use of vaccines as a treatment where vaccines become immunomodulators."

Maxygen will combine its MolecularBreeding directed molecular evolution technologies and protein modification expertise with ALK-Abello's proprietary allergen pipeline to develop novel anti-allergy therapeutics for dust mite and grass allergies.

MaxyGen focuses on directed molecular evolution, the process by which novel genes are generated for commercial use. Its proprietary technologies are known as MolecularBreeding, which consists of two parts: DNAShuffling and MaxyScan.

DNAShuffling recombines single genes or gene families to generate a library of novel genes. MaxyScan is a series of specialized screening systems that selects gene products and enzymes best suited for specific commercial purposes. MaxyGen has a patent portfolio that includes 15 issued U.S. patents, five of which it owns and 10 that are in-licensed.

The new deal is similar to others Maxygen has entered, company officials said.

Maxygen has established collaborations with several companies, including Novo Nordisk A/S, of Bagsvaerd, Denmark; AstraZeneca plc, of London; and DSM, of Heerlen, the Netherlands. Committed funding from its commercial collaborators and U.S. government agencies totals over $94 million. As of Sept. 30, it had cash, cash equivalents and marketable securities of $266 million.

In December, Maxygen and Integrated Genomics Inc., of Chicago, entered a collaboration allowing Maxygen access to Integrated Genomics' bioinformatics software and databases.

The market for the potential allergy therapeutics is estimated at about $1.6 billion, but company officials said it could be larger than that estimation. Gill said the competition is there, but that the therapeutics that cure the problem instead of the symptoms have greater value.

"The current market for allergy treatments is very significant, $3 billion to $6 billion a year, and they're dominated by antihistamines," Gill said. "In general, many patients who take these drugs have side effects like drowsiness, but none of those drugs actually treats the disease, they treat the symptoms. The exception is ALK-Abello's product line of immunotherapeutics for treating allergic disease, and that's a $200 million market. Our hope is to come up with new recombinant products that will allow for rapid expansion of that market."

The deal was disclosed after the market closed Thursday. Maxygen's stock (NASDAQ: MAXY) dropped 12.5 cents Thursday to close at $19.937. n