By Mary Welch

With only months to go before its money ran out, Antisoma plc signed a deal with Abbott Laboratories in which it is guaranteed $25 million over the next two years - and could get $100 million - to develop and market Theragyn, Antisoma's lead cancer product.

"My PR people are trying to get me to say it's the largest deal between a British biotech company and an American pharmaceutical firm," said Antisoma's CEO Glyn Edwards. "But it doesn't matter if it's the largest or the second, third or fourth. For us it's a very good deal and for Abbott it's a very good deal."

As part of the arrangement, Abbott, of Abbott Park, Ill., will purchase $13 million worth of equity in Antisoma, which represents about 7 percent of the London-based company. Abbott will also provide $12 million in direct funding to help develop Theragyn, which is now in Phase III studies as an adjuvant for ovarian cancer.

"That $25 million is about as irrevocable as you can get," Edwards said. "It gives us two years of cash."

After that, there could be milestone payments, about half of which are based on meeting various regulatory targets and product approvals, the other half on sales milestones. Some of those milestone payments will be in equity. Depending on market conditions, Abbott could end up owning about 20 percent of Antisoma. Over the life of the agreement, total payments to Antisoma before royalties, including sales performance thresholds, have the potential to exceed $100 million.

"At the end of two years [when the Phase III trial is completed] we will open the box and see the results. We'll either be very happy or not so happy," Edwards said. "If we're very happy, then the milestones will start kicking in."

For its money, Abbott received the license to develop and market Theragyn for ovarian cancer as well as for gastric, pancreatic, uterine and colorectal cancers. Although a team with equal representation from both companies will manage the product's development program, Antisoma will take the lead through the clinical trials and Abbott through the regulatory processes and marketing of the drug.

"They have the ability to handle that juggernaut of marketing," Edwards said. "We couldn't even pretend to have that expertise."

Abbott has been building its presence in oncology "and this is another indication of that," said Alex Zisson, senior analyst and managing director of Hambrecht & Quist LLC in New York. "Given this deal, along with others, Abbott is going to have a pretty decent pipeline in oncology. It's a pretty big deal and the early preliminary data on Theragyn is pretty interesting."

The agreement couldn't have come at a better time since Antisoma was going to run out of money before the end of the year. The company floated on the pan-European market Easdaq in December 1998, raising $16.5 million, but the escalating cost of the Phase III trial left it with only two months left of cash.

"We had the option of doing a secondary offering but I was confident that we would close this deal with Abbott," Edwards said. "Of course it took a little longer than I wanted, which left me with several sleepless nights. We didn't want to go to the market and dilute the company more. We had the support of the board, but of course, if it didn't work out, our approach would have been questioned. We either were going to look courageous or foolish. Of course, hindsight is wonderful but at the beginning of the week, I was worried about being too flippant. At least now, we're vindicated."

Theragyn is a monoclonal antibody that delivers radioactive yttrium-90 to kills cancer cells. It targets and destroys tumor cells remaining in the peritoneum following conventional treatment.

In Phase II trials, women with ovarian cancer who took Theragyn had an 80 percent survival rate after five years while women who didn't take the drug had a 40 percent survival rate after five years. This summer the company released data suggesting the 10-year survivability rate should be about 75 percent for women taking Theragyn in contrast to the current 30 percent with conventional treatment.

"Of course it wasn't randomized and it was a small number of patients," Edwards said. "There were flaws in it but it shows it definitely has a spectacular survival rate."

The current Phase III trial involves about 300 women with ovarian cancer in the U.S., Canada, Australia, Israel and the UK. Enrollment is completed but the women must be followed for two "and a bit" years. The companies expect to announce results in 2001. Due to the drug's designated orphan status, it could "whistle through regulatory authorities" and be approved and on the market by mid-2002, Edwards said.

"We have a good shot at that timetable and then there will be quite an attractive profit kicking in," he said "We'll have to wait and see."

The signing of the deal with Abbott supports Antisoma's business strategy of in-licensing drugs, taking them through Phase II and then licensing them with a partner.

Antisoma obtained Theragyn from Cancer Therapeutics Ltd., of London, a joint venture it set up with the Imperial Cancer Research Fund.

"I've been talking about the benefits of this strategic plan with great conviction," he said. "This deal has validated our business model. We can do it and get a good value deal."