By Randall Osborne
West Coast Editor
Chasing big profits in genomics has become a CAT-and-mouse game for Human Genome Sciences Inc. (HGS), and William Haseltine, chairman and CEO, said he believes his company's latest deal has the market cornered.
Just three months after signing an agreement with Abgenix Inc. for human antibodies using that company's transgenic mouse, Rockville, Md.-based HGS reached across the ocean to enter a $67 million collaboration with England-based Cambridge Antibody Technology plc (CAT), for access to its phage display technology.
Under the terms of the agreement, HGS may use CAT's technology to pursue not only its own drugs, but to forge collaborations with other firms - thus becoming a "one-stop shop" for those that want to make human antibodies, Haseltine said.
"I don't think any other genomics companies are in any position close to us," he said. "It's a deal made in heaven."
The 10-year pact, HGS' second with CAT, gives HGS "unlimited access" to CAT's phage-display platform to develop and sell fully human antibodies, diagnostics and research tools, paying CAT a share of revenues, along with clinical development milestone payments and royalties, Haseltine said.
"We can make obsolete and bypass gene expression technology, and make sets of antibodies to almost all human proteins," he said. "[Other companies] don't make proteins. They don't make antibodies. Unless you have the genes, make the proteins and make the antibodies, you can't be in this business."
HGS has identified and expressed more than 9,000 novel human proteins, each a potential antibody target, since each contains a signal peptide directing it to the outside of a cell where it can be recognized by an antibody. More than 5,000 of these potential antigens are described in pending or issued patent applications.
For its part in the deal, CAT may select up to 24 of HGS' proprietary antigens for preclinical work, and HGS has the right to share development costs - and divide the profits equally with CAT - on up to 18 of the products, while CAT may develop six on its own, providing HGS with milestone payments and royalties.
David Chiswell, CEO of the firm in England, said the deal with HGS provides "a fantastic opportunity for both of us to build our pipelines and deliver the benefits of our technologies," thanks to its flexibility.
"Either we make antibodies and HGS develops them, or we make the antibodies and develop them, or we both choose targets and do the development together," he said.
HGS will buy 1.67 million shares of CAT for the sterling equivalent of $55 million, giving HGS an initial equity stake of approximately 6 percent in CAT. The investment, subject to approval by CAT shareholders, will be made at a price of $32.96 (#20.75) per share, which is a 20 percent premium to the 10-day average share price as of Tuesday. Also, HGS will pay $12 million in licensing fees to CAT, which includes research support at CAT to help develop HGS human antibody products.
HGS entered its first deal with CAT last fall. Already, Haseltine told BioWorld Today, two antibodies are under development: one for autoimmune diseases, and one for myeloid tumors.
In December, HGS signed what was described as a long-term deal with Abgenix Inc., of Fremont, Calif., known for its XenoMouse technology. HGS is using mice to generate drug candidates with HGS' antigens. Terms were not disclosed. (See BioWorld Today, Dec. 2, 1999, p. 1.)
"This is much bigger," Haseltine said. "With a mouse you can make one, two or 10 antibodies at a time. With phage display, you can make thousands at a time. Abgenix gives us a considerable amount of technology - up to 1,000 mice - and we have a couple dozen proteins we can develop ourselves. But [the CAT deal] has the potential to redefine the scope of what people mean by proteomics."
HGS' stock (NASDAQ:HGSI) closed Wednesday at $225.25, up $7.
Editors Note: BioWorld International correspondent Nuala Moran contributed information for this story.