By Mary Welch

Boosted by a $20 million licensing deal with Schering AG, Techniclone Corp. said enrollment of its Phase II/III study for Oncolym, a radiolabeled murine monoclonal antibody, should be completed soon, and a biologics license application is expected in the third quarter of this year.

Techniclone, of Tustin, Calif., is developing Oncolym for patients with intermediate- and high-grade non-Hodgkin¿s B-cell lymphoma.

The agreement with Berlin-based Schering promises up to $20 million in cash for Techniclone, through milestone payments and capital costs for commercial radiolabeling scale-up. Included in the deal is a $3 million up-front payment. Schering also will assume 80 percent of the existing clinical trial costs and pay a royalty to Techniclone on worldwide sales of Oncolym.

In addition, the two are negotiating the terms of a possible licensing of Techniclone¿s Vascular Targeting Agent (VTA) technology. VTA includes agents that block the flow of oxygen and nutrients to a solid tumor¿s vascular network, causing clotting and necrosis.

¿This is our first licensing deal, and it is in line with our strategy to have licensing agreements with first-class companies,¿ said Larry Bymaster, Techniclone¿s president and CEO, who joined the firm in May.

¿The company has been around since 1982, but really Techniclone is a restart,¿ he said. ¿From the board on down, we changed the company, streamlined management and consolidated the process of bringing products through trials. Obviously, we¿ve made a lot of progress.¿

Currently in clinical trials at seven centers with 30 patients, Techniclone had planned on 13 centers and 90 patients. The picture may change with Schering in charge of the program¿s development.

Oncolym is Techniclone¿s only product that acts on a non-solid tumor. A direct tumor-targeting agent, it is made up of a murine monoclonal antibody radiolabeled with iodine-131, and is highly specific for the HLA-Dr antigens on the surface of B cells.

Few, if any, similar drugs are under development and no other treatment options are available that do not use a highly toxic, salvage chemotherapy approach, Bymaster said ¿ although, according to Techniclone, nine new cytotoxic drugs and several wholly new biologics are in the works.

¿The way we see it, there are three new products that may have the capability to treat [non-Hodgkin¿s lymphoma] patients who have failed chemo and radiation therapy,¿ Bymaster said. ¿That would be Oncolym, Bexxar by Coulter Pharmaceuticals [of Palo Alto, Calif.], and Rituxan by Idec [Pharmaceuticals Corp., of San Diego]. But those two drugs are for low-grade non-Hodgkin¿s, and Oncolym is for moderate to severe.¿

Prior to Schering¿s involvement, Techniclone said it expected Oncolym to be used by at least 10,000 patients per year in the U.S. With an assumed selling price of $12,000 to $16,000 per treatment regimen, Oncolym¿s sales could translate into annual product revenues of $150 million.

¿We¿ve seen reports that this drug could be anywhere from $150 million to $300 million,¿ Bymaster said. ¿But Schering is now in charge of the pricing.

In order to grant Schering worldwide rights, Techniclone had to exercise its option to reacquire marketing from Biotechnology Development Ltd., of Las Vegas, which had marketing rights outside the U.S. Techniclone reacquired those rights via a combination of stock, warrants and promissory notes worth about $4.5 million, Bymaster said.

Techniclone¿s stock (NASDAQ:TCLN) closed Monday at $1, down $0.031.