By Lisa Seachrist
Washington Editor
Abgenix Inc. signed its 14th - and largest - XenoMouse collaboration in a deal with Rockville, Md.-based Human Genome Sciences Inc.
Fremont, Calif.-based Abgenix and HGS aren't disclosing the precise details of the collaboration, but are describing the deal as a long-term technology exchange aimed at identifying new product candidates based on targets in the HGS genome database.
"HGS has such a flood of proprietary gene targets it's going to be hard to exhaust the possibilities," said Kurt Leutzinger, vice president and CFO for Abgenix. "There has been a lot of investor excitement in the genomics field of late. We see our technology as the next stage of development in the genetics revolution."
Abgenix's XenoMouse technology uses a strain of genetically engineered mice that, once immunized with an antigen, make entirely human antibodies that cause no immunogenic response in humans. The technology allows researchers to isolate the gene that makes the antibody, and scale up to manufacturing antibodies in two to four months. As a result, antibody therapies can move rapidly into the clinic.
"The big drug companies have a problem," Leutzinger said. "They are running out of products in their pipelines. By using genomics and our technology, that may be a very quick way to generate new products."
"This is a very important deal for us, too," said Arthur Mandell, senior vice president of corporate and business development for HGS. "As we look at our technology and database, antibodies are a natural extension for us."
Abgenix's stock (NASDAQ:ABGX) climbed 17 percent on the news Wednesday to close at $60.125, up $8.75 a share. HGS' stock (NASDAQ:HGSI) rose by nearly 8 percent, closing ups $8.875 at $120.875.
Under the terms of the collaboration, HGS has the right to use Abgenix's XenoMouse technology to generate fully human antibody drug candidates using HGS' extensive collection of proprietary, well-characterized antigens. HGS will develop and commercialize antibody drug candidates that result. In addition, Abgenix will also have the option to develop and commercialize antibodies derived from HGS antigens.
For certain antibodies, up to two a year for the length of the agreement, the two companies will jointly develop the drugs.
"One of the unique aspects of this agreement is that there is no cash up front," said William Haseltine, chairman and CEO of HGS. "This is a very good deal from both sides. It combines two strong novel technologies from two companies who have the common goal of bringing a new class of drugs to market."
Instead of up-front cash payments, the companies will pay each other undisclosed milestone payments and royalties for products they develop individually. The companies will share development costs and eventual profits from the products they develop jointly.
Leutzinger noted most deals Abgenix has completed involve "leasing out" the use of the XenoMouse technology. Abgenix would receive milestone payments in the $8 million to $10 million range and middle-single-digit royalties on any products developed, he said.
"The HGS deal in a sense provides us with a large source of those [single-target] deals," Leutzinger noted.
In addition to the sweeping HGS deal, Abgenix announced a more typical research license and option agreement with Chiron Corp., of Emeryville, Calif. That deal will allow Chiron to use XenoMouse technology to generate antibodies to an undisclosed antigen in the field of autoimmune diseases. In addition, Chiron may use XenoMouse to develop antibodies on up to four cancer targets. Abgenix will receive a licensing fee, potential milestone payments and royalties for any products developed using XenoMouse.
Abgenix also reported positive Phase I/II clinical results with its ABX-ILB human antibody in the treatment of moderate to severe psoriasis. The company reported a dose-dependent improvement in multiple measures of the disease.
"With our $75 million placement we now have $125 million in cash," Leutizinger said. "With this kind of financial strength we can take products through Phase II and complete deals for better economics. I don't see us taking products beyond Phase II - it just isn't the best use of our capital."