By Matthew Willett

For marketing and development of its antibody for steroid-resistant graft-vs.-host disease (GVHD), pairing up with SangStat Medical Corp. seemed a natural move for Abgenix Inc.

And that's just what the companies did. In an agreement that includes milestone payments and royalties, in addition to an up-front license fee, Abgenix signed over global distribution rights to ABX-CBL, an anti-CD147 monoclonal antibody.

"We're very pleased to be working with SangStat, which is a leader in the GVHD field," said Scott Greer, president and CEO of Abgenix. "It's fairly specialized, and there are only a handful of companies that have the experience to effectively commercialize a product in that area."

Specific details of the agreement were not disclosed, but Greer said the deal includes provisions for development costs and profit sharing. He also said Abgenix retains manufacturing rights.

"We haven't disclosed financial terms, other than the basic structure," he said. "It's set up with an initial payment, a series of milestone payments made to Abgenix, and the cost of continuing development of the project will be shared equally. The profits generated as the product reaches the market also will be shared equally."

Thomas Dietz, of Pacific Growth Equities Inc., however, estimated in a research note the initial payment to be close to $3 million, and said Abgenix will receive two milestone payments. Dietz reiterated a strong buy rating for Abgenix based on the company's development partnerships and strong balance sheet.

ABX-CBL is in a Phase II/III study designed to demonstrate efficacy of a single dose level.

"If we see the improvements we expect or hope to see based on the Phase II trials, I think that will allow us to support an application for an NDA," Greer said.

The drug's potential could be expanded, however, Greer said, especially now that SangStat is on board.

"We're potentially looking at doing a trial in Europe, where SangStat has experience, and that could broaden our market geographically, or to potentially expand the application to include the whole GVHD population," Greer said. "There are a lot of internal, clinical and regulatory paths open to us now that we've got a partner like SangStat."

The collaboration with SangStat, of Fremont, Calif., is Abgenix's 23rd partnership and its seventh new alliance this year, Greer said.

Abgenix's stock (NASDAQ:ABGX) gained $3.312 Wednesday to close at $63.562. SangStat (NASDAQ:SANG), which also reported second-quarter numbers that were in line with analysts' estimates, and was downgraded by Chase H&Q from "strong buy" to "buy," fell $2.875 to close at $18.