By Lisa Seachrist
Abgenix Inc. and Immunex Corp. have joined forces to develop and commercialize Abgenix's anticancer antibody, ABX-EGF.
For Fremont, Calif.-based Abgenix the deal is a marked departure from the XenoMouse deals the company has completed during the past year. Instead of collaborating with other companies to produce fully human antibodies the partner then develops, Abgenix is remaining an active participant in the development and commercialization of one of its own in-house drug candidates.
"We are really so excited to have this type of deal," said Ina Cu-Unjieng, manager of investor relations at Abgenix. "This is a breakthrough deal for us. It really signals the evolution of our business."
While the financial terms of the deal aren't being disclosed, the collaboration calls on Seattle-based Immunex to make an initial license fee payment and a second payment once ABX-EGF has advanced to Phase II testing. The companies will split the costs of development in the Phase II and Phase III programs. With ABX-EGF already in a Phase I clinical trial, Abgenix will complete that phase of development. The companies will share jointly responsibility for managing the Phase II program. Immunex will take over the management of the Phase III program.
Should the drug garner FDA approval, the companies will split the profits from sales. Immunex will head the commercialization of ABX-EGF, while Abgenix will retain the right to co-promote the product.
ABX-EGF is a fully human antibody directed against the human epidermal growth factor receptor (EGFr), a receptor that lies on the outer surface of many cells. This receptor is a prime target for anticancer agents because it is overexpressed in a large number of the most common human tumor types.
For example, 70 percent of lung cancer tumors and 80 percent of prostate cancer tumors overexpress EGFr. Other cancers overexpressing EGFr include pancreatic, colorectal, renal cell and esophageal. Epidermal growth factor and its receptor are implicated in the initial transformation of a normal cell to a cancerous cell, as well as angiogenesis and tumor invasiveness.
"We think the biology of this fully human monoclonal antibody is the leading biological approach to targeting this receptor," said Craig Parker, senior vice president at Immunex. "The EGF receptor is one of the most exciting targets in cancer research."
Cu-Unjieng pointed to Immunex's successful rheumatoid arthritis drug, Enbrel, as one of the key reasons Abgenix chose Immunex as a partner. In addition, she noted the company already has an oncology presence. Parker noted the deal with Abgenix highlighted Immunex's commitment to oncology.
"In terms of our investment and commitment to oncology this deal is very important," Parker said. "It really is our long-term goal to be one of the top three oncology franchises. We are going to take advantage of monoclonal antibody technology as a means to become that."
Mike King, vice president and senior biotechnology analyst at Robertson Stephens, called the deal a great strategic move for Immunex because it strengthens the company's oncology pipeline. He estimated the two license fee payments at $7 million to $10 million each. The licensing fees will eat into Immunex's earnings, slightly dropping King's estimate of fiscal year 2000 earnings to 27 cents per share from 28 cents per share. It is money King said was "well spent on the part of Immunex."
Because the EGF receptor is a validated drug target, King said in a note that "the development pathway for ABX-EGF should be a relatively straightforward, low-risk proposition."
Thomas Dietz, director of research for Pacific Growth Equities Inc., said the deal was good for Abgenix as well even though as a result of supporting 50 percent of the development costs the company won't see profitability until at least 2005 rather than 2002.
Dietz said in a note the retention of "50 percent of the profits of a drug that may find utility in the over 300,000 cancer patients each year in the U.S. alone who undergo treatment for cancer that over-expresses the EGF receptor" outweighs the delay to profitability.
Cu-Unjieng said the move represents the strategy the company intends to take in developing its own products. She said, "We intend to keep our products a little longer before we find partners."
The company has $555 million in cash, and Cu-Unjieng said this position made it possible for Abgenix to undertake a deal in which it pays 50 percent of the development costs.
Not all analysts lauded Abgenix's move. A note from Prudential Vector Healthcare Group that questioned the choice and downgraded the stock to a hold helped send Abgenix's stock (NASDAQ:ABGX) down 14.75 percent to close Thursday at $52, down $9. Immunex's stock (NASDAQ:IMNX) closed at $51.375 down $2.875.