By Frances Bishopp
Cell Genesys Inc., its subsidiary, Abgenix Inc., and Japan Tobacco Inc. have entered into an agreement with GenPharm International for human monoclonal antibody technology involving genetically modified strains of mice capable of producing fully human monoclonal antibodies for disease therapy.
The agreement settles a three-year-old lawsuit between Cell Genesys and GenPharm in which Cell Genesys accused GenPharm of stealing trade secrets related to development of transgenic mice for production of human antibodies to treat disease. (See BioWorld Today, Feb. 2, 1994, p. 1.)
GenPharm denied the accusations and accused Cell Genesys of filing the court suit in retaliation for losing the race to develop transgenic mice. (See BioWorld Today, Feb. 3, 1994, p. 1.)
In January 1997, Cell Genesys dropped the suit, although the legal fight between the two firms over intellectual property rights to the technology continued on other fronts. (See BioWorld Today, Jan. 17, 1997, p. 2.)
The agreement settles all portions of the suit, R. Scott Greer, president and CEO of Abgenix, of Freemont, Calif., told BioWorld Today. "This is the end of the litigation story between all the parties involved," Greer said. "The pending lawsuit will be dismissed."
The agreement includes a worldwide, royalty-free cross-license to all issued and related patent applications pertaining to the generation of fully human monoclonal antibodies in genetically modified strains of mice. The issued patents include claims covering the introduction of human antibody genes into mice as well as the inactivation of mouse antibody genes. They include a European patent granted to Cell Genesys and several U.S. patents issued to GenPharm during the first quarter of this year.
As part of the cross-license agreement, Cell Genesys was granted a worldwide, non-exclusive license in the field of gene therapy to certain technology of GenPharm.
"The cross license is only to patents," Greer said, "and we have basically agreed through this cross-license mechanism that each of us will have the ability to freely pursue our own technologies. We are not sharing technology, we are just sharing intellectual property.
"We sat down and worked out our differences and each side now is free to go off and run its business," he added. "It's much better to work things out and to spend money developing the products and the technology, rather than on legal fees."
Under terms of the agreement, Cell Genesys, of Foster City, Calif., will issue a note due Sept. 30, 1998, for $15 million, which bears interest at 7 percent per year and is convertible at the option of GenPharm, of Palo Alto, Calif., into 1,666,666 shares of Cell Genesys common stock at $9 per share. The conversion price is subject to reset in 12 months.
In addition, Japan Tobacco agreed to make an undisclosed cash payment to GenPharm. The agreement also calls for two potential milestone payments of $7.5 million each to GenPharm based on the future issuance of certain patents relating to human monoclonal antibody technology in Europe, Japan and/or in the U.S. These payments will be made by Xenotech L.P., of Freemont, an equal joint venture of Abgenix and Japan Tobacco.
Xenotech was formed in 1991 as a 50/50 joint venture between Japan Tobacco, of Tokyo, and Cell Genesys. Japan Tobacco, through this joint venture, provided financial support to create the transgenic mouse technology that makes fully human antibodies. The partnership interest belonging to Cell Genesys originally was transferred to Abgenix when the company was formed.
Cell Genesys formed Abgenix in July 1996 to house the company's human monoclonal antibody technologies and programs. *