By Mary Welch

Coulter Pharmaceutical Inc. will pay up to $11.75 million, including a $1.5 million up-front cash payment, to Pharma Pacific Pty. Ltd., for the worldwide rights to 64G12, a therapeutic monoclonal antibody.

"It's a good deal," said Richard van den Broek, senior analyst with Hambrecht & Quist LLC., in New York. "It's a comparatively unknown compound in preclinical development. But it could pay handsome dividends without [Coulter facing] a lot of risk - it's a fairly modest up-front payment. If it doesn't work, they're not out a lot of money."

Under the agreement, South San Francisco-based Coulter will receive exclusive worldwide rights for all human therapeutic and prophylactic uses for 64G12 and related intellectual property, as well as other antibodies recognizing the Type I interferon receptor.

In addition to the $1.5 million, Coulter potentially will pay up to $10.25 million in license fees and milestone payments to Pharma Pacific. Coulter will handle the worldwide clinical development, manufacturing and commercialization. Pharma, based in Sydney, Australia, will also receive royalties on future product sales. Coulter, which must produce a humanized version of the compound, hopes to enter Phase I trials within two to three years.

Pharma Pacific's 64G12 is a murine monoclonal antibody specific for the Type I interferon receptor.

"The preclinical data was quite interesting and we believe it has significant potential for a number of autoimmune diseases as well as transplant rejection," said Geoffrey Yarranton, vice president of research. "The preclinical work for transplant rejection, for instance, was done in primates as opposed to rodents, which makes it more exciting because it's not so easy to do in primates. It may be that you could have a short-term treatment with long-term effects. We'll be looking at bone transplants."

The preclinical work suggested that the 64G12 antibody provided selective and prolonged neutralization of Type I interferons. Type I interferons (interferons alpha, beta and omega) play a key role in the immune response systems. Autoimmune diseases, which affect between five percent to seven percent of the population, are characterized by abnormal immune response against host tissue, including the overproduction of Type I interferons. Some of these autoimmune diseases include rheumatoid arthritis, systemic lupus erythematosus, and Crohn's disease.

"Interferons have become the bad guys in autoimmune diseases," Yarranton said. "There's no doubt that if you can block the effects of these interferons, it may have potential for a number of autoimmune diseases. Many of these autoimmune diseases have a similar mechanism so 64FG12 would have far-reaching effects for a number of these diseases."

Ina Cu-Unjieng, investor relations specialist for Coulter, said the product is "a logical next step for us. We're taking our cancer experience and expertise and expanding our horizons."

Historically, Coulter has been engaged in developing cancer therapeutics based on two drug discovery programs: conjugated monoclonal antibodies; and tumor-activated peptide pro-drugs. Its most advanced drug is Bexxar, a monoclonal antibody conjugated to a radioisotope, for the treatment of non-Hodgkin's lymphoma. The company is putting the finishing touches of its biologics license application for Bexxar, and expects to file this latter month. If approved, it would be the first radioimmunotherapy in the U.S. for that indication.

Coulter Pharmaceutical's stock (NASDAQ: CLTR) closed Tuesday at $25.25, down $0.75.