By Mary Welch

Medarex Inc. signed up a ninth partner for its HuMAb Mouse technology, as Novartis Pharma AG agreed to pay morethan $50 million, plus royalties, to use the fully human monoclonal antibody technology for the next 10 years.

Under the terms of the agreement, Basel, Switzerland-based Novartis will use Medarex's technology to produce high-affinity,fully human antibodies for an unlimited number of targets over the decade.

Lisa Drakeman, senior vice president of Medarex, said Novartis will use the mouse technology "throughout the organization. Itwill become an important product discovery tool for them."

Novartis will make an initial $2 million equity purchase, and another $1 million equity purchase in a year. After the first fiveyears, Novartis may purchase $3 million more in equity. The two firms said HuMAb Mouse technology access fees, license feesand milestone payments could exceed $50 million, not counting royalties.

Before inking the deal, Medarex, of Annandale, N.J., gave Novartis a preview of the technology. "We did allow Novartis tohave a demonstration before we came to terms," Drakeman said. "They were very satisfied and developed an initial antibodycandidate."

That candidate has an affinity of ten to the tenth power, which is "really good," Drakeman said. "Getting 10 to the eighth[power] or 10 to the ninth is good," she added. "The higher the affinity, the better the ability to bind to the target."

In October, Centocor Inc., of Malvern, Pa., exercised its option to obtain an exclusive commercial license to fully humanantibodies in four antigens created with the technology. Centocor obtained a number of product candidates, including one withan affinity of 10 to the twelfth power. Medarex received $4 million from Centocor for the option.

The technology was developed by GenPharm International Inc., of Palo Alto, Calif., which Medarex acquired in May 1997 for$65 million. The HuMAb Mouse generates, within three to six months, human (and therefore non-immunogenic) monoclonalantibodies with strong binding ability to a wide variety of disease targets. These human antibodies can be readily reproduced asmonoclonal antibodies and manufactured in large scale for therapeutic or diagnostic use. (See BioWorld Today, Oct.28, 1997, p. 1.)

Kevin Tang, an analyst at BT Alex. Brown Inc., in New York, wrote in a report that, since the company "possesses one of themost leverageable technologies of this group (six other biotechnology companies that are developing antibody-basedtherapeutics), we believe that its technology value ultimately could meet or exceed parity with this 'comparable' average."

Medarex Undervalued Compared To Similar Firms

Tang concluded, "Medarex appears significantly undervalued relative to both its commercial potential and a group of'comparable' biotechnology companies."

According to the analyst, Medarex's currently technology value of $78 million (adjusted for the GenPharm acquisition) is 61percent below the $200 million average technology value of those other six biotech firms.

In all, Medarex has generated agreements worth up to $150 million, plus royalties, with its nine partners, including Bristol-Myers Squibb Co., of New York, and Schering AG, of Berlin.

"We intend to keep on going with a lot of partners," Drakeman said. "The discovery potential of the technology is unlimited."

Medarex's stock (NASDAQ:MEDX) closed Monday at $4, up $0.125.

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