Instead of going separate ways after ending three years of courtbattles over competing anti-immunoglobulin E (IgE) antibodies forallergies and asthma, Genentech Inc. and Tanox Biosystems Inc.agreed to pool resources to get a product to market.

The two companies said Tuesday they settled disputes involving abreach of contract lawsuit filed by Tanox, of Houston, and a patentinfringement action brought by Genentech Inc., of South SanFrancisco.

The litigation, begun in 1993, centered on development of anti-IgEantibodies, which are used to remove from the blood stream IgE andIgE-producing B cells responsible for triggering allergic reactionscaused by numerous antigens. The chimeric antibodies are derivedfrom mice and genetically engineered with human proteins.

Privately held Tanox and its collaborator Ciba-Geigy Ltd., of Basel,Switzerland, which is merging with fellow Basel-based drug maker,Sandoz Ltd., have anti-IgE antibodies in Phase II trials for allergicreaction to mountain cedar pollen and asthma.

Genentech has Phase II studies of its anti-IgE antibodies under wayfor allergic rhinitis and asthma.

Under the settlement agreement, which must be approved by thefederal courts, the companies at the conclusion of Phase II trials willselect one of their products to move into a Phase III study. Themonoclonal antibodies of Tanox and Genentech essentially are thesame. A pivotal clinical trial could begin in the third or fourth quarterof 1997.

David Anderson, Tanox's chief operating officer, said during thelitigation the companies were able to examine each other's programsand concluded working together would be mutually beneficial.

"We saw an opportunity that maybe is unique" to combine resources,he said. The Phase III trial, Anderson added, will be a team effort.

Tanox and Genentech considered working together on the antibodiesin 1989, but could not agree on terms of a collaboration.

In its December 1993 breach of contract lawsuit, Tanox allegedGenentech initiated its anti-IgE development after examining Tanox'smonoclonal antibodies under an agreement to discuss a collaboration.That preliminary pact, Tanox contended, precluded Genentech fromstarting a competing program.

In January 1994 Genentech fought back filing a patent infringementlawsuit. Tanox's anti-IgE product, Genentech alleged, violated itspatent covering production of chimeric immunoglobulin antibodycompositions.

In settling the lawsuits, Tanox will receive an initial sum andmilestone payments for the joint development project. Dollaramounts were not disclosed. Tanox also will be paid royalties fromsales worldwide excluding some Asian countries where it and Cibawill co-develop and co-market the drugs.

Genentech, which is about 70 percent owned by Basel-based RocheHolding Ltd., and Ciba will share marketing of the antibodies in theU.S. and Europe. Roche will have the option of co-marketing theproducts in Europe and Japan.

Genentech's stock (NYSE:GNE) closed Tuesday at $52.25, down 12cents. n

-- Charles Craig

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