By Mary Welch

Cambridge Antibody Technology Group plc (CAT) entered into a deal worth up to $212 million, of which about $27 million is guaranteed, with G.D. Searle & Co. for the development of fully human monoclonal antibody-based drugs for several disease areas.

Under the terms of the agreement, an affiliate of Skokie, Ill.-based Searle will make a $12.5 million up-front equity investment by purchasing 1.87 million shares of CAT's common stock at a price of $6.71 per share. The purchase price is a 15 percent premium to the average share price over the 20 trading days prior to the announcement of the deal. The investment represents about 6.9 percent of Melbourn, UK-based CAT.

In addition, over the initial three years of the research collaboration, Searle will commit to minimum research funding of $14.5 million and will also pay milestone payments to CAT. Searle, the pharmaceutical arm of Monsanto Co., has the option to extend the collaboration up to five years on similar terms. And, over the potential five-year research collaboration, CAT could receive another $35 million in license fees, research funding and technical performance milestones.

If the fully anticipated program is successful - meaning that a specific number of antibody-based drugs are developed and approved - CAT would receive an additional $150 million based on clinical development and regulatory approval milestones. CAT will also receive royalties on the sales of both antibody-based drugs and small-molecule drugs developed by Searle when CAT technology is used to validate a target.

"The alliance is CAT's largest to date and provides further endorsement by the pharmaceutical industry of the potential for human monoclonal antibodies to fill the product pipeline gap," CAT CEO David Chiswell said. "This further underscores our commitment to delivering antibodies on an industrialized scale, to add value to the genomics-derived disease targets of the future."

The collaboration will meld CAT's expertise in high-throughput antibody generation and development of human antibody drugs with Searle's capabilities in genomics, discovery biology and drug development.

Searle will supply target proteins and both companies will perform research to demonstrate and validate their disease association. As part of the process, CAT will use its ProAb technology for high-throughput antibody generation to examine the expression of novel proteins in human tissues.

Both companies will develop customized assays and CAT will generate high-potency human antibody-based drugs directed to the targets. Searle will take over further development as well as the marketing of any products.

Earlier this year CAT signed a deal worth up to $70 million with Wyeth-Ayerst Research, of Cambridge, Mass., and with Human Genome Sciences Inc., of Rockville, Md., for undisclosed financial terms. It also has alliances with several companies, including Eli Lilly and Co., of Indianapolis; Genentech Inc., of South San Francisco; ICOS Corp., of Bothell, Wash.; and AstraZeneca plc, of London.

CAT uses phage display systems for rapidly isolating fully human monoclonal antibodies. Its phage display library currently has about 100 billion distinct antibodies. ProAb is CAT's approach to functional genomics using the antibody library as a tool to build a database of information on where a protein is made, where it ends up and whether it has any connection with important diseases. Proteins implicated in a disease can then be the principal targets of antibody and small-molecule drugs. With ProAb, CAT can analyze data on about 1,000 potential drug targets a month.

Editor's Note: BioWorld International correspondent Nuala Moran contributed to this story.