By Matthew Willett
Antibody innovators Abgenix Inc. raised $230 million through the placement of 3.3 million newly-issued $70 shares with Cell Genesys Inc. tagging along for a $50 million ride, selling 750,000 of its shares of Abgenix for proceeds totaling that amount.
The offering reduces Cell Genesys' stake in Abgenix to about 10.5 percent but raises the Foster City, Calif., company's cash position to more than $282 million. CG retains nearly nine million shares in Abgenix.
Fremont, Calif.-based Abgenix said it will use the proceeds from this second follow-on offering of the year for product development, equity investments in collaborators, technology acquisition, business acquisitions, lab and manufacturing facility expansion and general corporate expenses.
Abgenix Chief Financial Officer Kurt Leutzinger told BioWorld Today that the proceeds put the company in an enviable cash position. With about $775 million in the kitty now, these masters of the mouse can go without worrying about cheese.
"It's safe to say that we're not going to run out of cash," Leutzinger said. "With this amount of cash we can scale the business up and operate at a higher scale in all areas. With a cash balance like this we've gone beyond that classic biotech problem of being short on capital. Now we have to position ourselves to be able to chart a path to the top rung of biopharmacuetical companies."
To do that, he said, Abgenix will focus on commercializing its pipeline of XenoMouse-produced fully human antibodies to up its market cap.
"We have three products in the clinic, and two address a large market," Leutzinger said. "Our interleukin-8 product, ABX-IL8, is an antibody that binds to inerleukin-8, and it's currently testing in psoriasis, but it also may have potential for COPD, rheumatoid arthritis and also melanoma. It could be a very big product."
He added that ABX-IL8 showed clear activity and dose-dependent antibody response in its latest Phase I/II trial, and that a Phase II trial in progress should yield data early next year.
"Provided the Phase II data is supportive, we'll be beginning a Phase III trial probably next year, and if all goes well we could expect to launch the product by the end of 2004 and see a full impact in 2005," Leutzinger said.
Other candidates include ABX-EGF, a XenoMouse-produced antibody that targets egf-receptors that shows promise in treatment of a number of human cancers. He said the compound has eradicated human tumor growths in mouse models in preclinical research.
Leutzinger said that although the antibody field is crowded with biotechs like Cambridge Antibody Technology, of the UK; Protein Design Labs, of Fremont, Calif.; and Medarex Inc., of Annandale, N.J., his company is poised to take a lead.
"It's true that there are other antibody companies out there, but I think we have a number of assets that distinguish us," he said. "I believe we have the leading technology for generating high-affinity, fully human antibodies, which I believe are the preferred antibodies, as opposed to antibodies that still have mouse protein as a component."
Leutzinger said Abgenix also has done "a lot of collaborations that will give us a large number of proprietary disease targets to feed this technology for generating antibodies, so with both a large supply of disease targets and the leading technology for turning those targets into fully human antibody drugs, I feel we have all we need to become a prolific manufacturer of drug candidates."
The issuance leaves Abgenix with about 84.9 million shares outstanding. Abgenix's stock (NASDAQ:ABGX) closed Thursday at $91.375, up $8.687.