Protein Design Labs Inc.'s stock jumped more than 10 percent in onehour Tuesday morning after the company halted trading to reportPDL had been issued a patent that covers most humanizedmonoclonal antibodies.

"This is a fundamental patent that covers most humanizedantibodies," Laurence Jay Korn, CEO and co-founder of PDL, toldBioWorld Today. "It provides important protection in the U.S. forPDL's SMART antibodies and technology and, very importantly, itcovers most humanized antibodies developed by other companies. Itis an acknowledgment of the pioneering contributions of PDLscientists."

"There are about 20 humanized antibodies that are currently inclinical trials and about 80 additional humanized antibodies indevelopment," Korn said. "We believe most of these would becovered by our patent."

The significance of this patent is that 27 percent, that is 78, of the284 products that are in clinical trials in the biotech arena areantibodies," Anthony Butler, an analyst with Lehman Brothers inNew York, told BioWorld Today. "Twenty of them that we knowabout are utilizing humanized antibodies, therefore, given this patentissuance in the U.S. and in Europe, there is some likelihood that thesecompanies may have to negotiate a license with PDL."

"Such a license," he continued, "might generate $1 million or more inup-front fees and perhaps 3 percent to 5 percent royalties."

John Wong, an analyst with Van Kasper & Co., in Los Angeles,estimated licensing fees of at least $1.5 million for each company. "Ifyou are going to do any type of complementarity determining regionsengraftment using a mouse on a human framework, you may, morethan likely, be infringing on PDL's recently issued patent," Wongsaid.

There are several major companies, such as Genentech Inc.,MedImmune Inc., Celltech Group plc and several other companiesthat are in the mid- to late-stages of clinical development, that aregoing to have to face the issue of having to license this technology inorder to continue the work, Wong said.

The patent covers humanized antibodies which, in addition tocontaining the binding site of a mouse antibody transferred to ahuman antibody, also contain amino acid substitutions from themouse antibody into the framework of the humanized antibody, madeaccording to certain criteria.

Humanized antibodies usually contain such substitutions in order tohave adequate binding affinity for their target antigens. The patentscovers the manufacture, use, sale or importation of infringinghumanized antibodies in the U.S. and has a term ending in 2013.

EPO Issued Similar Patent Earlier This Year

In January, PDL , of Mountain View, Calif., received the first broadpatent on this technology from the European Patent Office. Since thattime, 18 oppositions have been filed in Europe, which, Jon Saxe,president of PDL told BioWorld Today, he considers an indication"of the broad impact of our patent."

"We are confident we will come out OK," Saxe said, "we won'tknow for two years because these oppositions take a long time. Wehave retained two excellent European law firms, Hepworth,Lawrence, Bryer and Bizley, of London, and Vossius and Partners, ofMunich. There aren't that many biotech law firms in Europe that areboth legally backgrounded as well as biotech science backgrounded.The fact that we have retained two of these companies will signalother people in the industry that we regard this as a major investorvalue in PDL."

"Last week, one of the five largest pharmaceutical companies inJapan gave PDL $1 million for a non-exclusive license to onespecific target antigen for one antibody, and in addition, there areroyalties and the possibility of co-promotion of their product in theU.S.," Saxe said. He would not reveal the company's identity.

"A key point is this is not transferring any PDL technology," Kornadded.

"This is the first time a company has taken a `naked license' simplyto receive rights under our patent portfolio," Saxe said. "We havehopes that this is the first of several, because there are a lot ofcompanies that will be impacted by our patent."

Currently, Hoffman-La Roche Inc., of Nutley, N.J., has a non-exclusive license under PDL's patents related to humanization todevelop and commercialize the humanized antibody. The agreementis PDL's second with Roche.

PDL also has entered into collaborative agreements with BoehringerMannheim GmbH, of Mannheim, Germany, Sandoz Ltd., of Basel,Switzerland, and three Japanese companies: YamanouchiPharmaceuticals Co., Kanebo Ltd. and Mochida Pharmaceutical Co.Ltd., in addition to the Japanese company that signed an agreementlast week.

Corange Ltd., parent of Boehringer Mannheim, owns approximately14 percent and Roche owns approximately 8 percent of the companyon a fully diluted basis.

PDL was co-founded in 1986 by Korn and Cary Queen, who is a co-inventor on the patent and is currently vice president of research atPDL.

Next: PLA To FDA In 1997

PDL's lead product is Zenapax, which is being jointly developed byHoffman-La Roche. In September, PDL released results of two PhaseIII studies showing that Zenapax was able to reduce the incidence ofrejection episodes in kidney transplant patients. Hoffman-La Rocheplans to file a product license application with the FDA in the firsthalf of 1997, Korn said. "This potentially could be the first humanantibody on the market," he said.

As of Sept. 30, 1996, PDL had 205 employees and $99.5 million incash, cash equivalents and investments. The company's net loss was$5.2 million in 1994, $8.4 million in 1995 and $10 million in the firstnine months of 1996.

PDL' stock (NASDAQ:PDLI) closed Tuesday at $31.50, up $4.

-- Frances Bishopp

(c) 1997 American Health Consultants. All rights reserved.