Cell Genesys Inc. formed a new business subsidiary, called AbgenixInc., that will house the company's human monoclonal antibodytechnologies and programs. The gene therapy portion of the businesswill stay with Cell Genesys.

Cell Genesys, of Foster City, Calif., will contribute $10 million to itsnew wholly owned subsidiary, as well as offer loan opportunities.Cell Genesys also will contribute its antibody technology and provideuse of its infrastructure for six to 12 months.

The idea then is Abgenix would be well along the way to establishingits own partnerships, securing its own financing and working out ofseparate facilities. The new company was assigned rights to theexisting five-year relationship in the monoclonal antibody area thatCell Genesys has with Japan Tobacco Inc. The companies have beendeveloping transgenic mice to produce antibodies that are fullyhuman.

In announcing the new company Thursday Cell Genesys said itestablished a new agreement with Japan Tobacco. Abgenix and JapanTobacco each can use the transgenic technology to develop productsfor their own portfolios. The developing company can obtainworldwide rights, and make its own licensing arrangements. But eachcompany has the ability to exercise options in its own territories to acertain number of products developed by the other. Japan Tobacco'sterritory is Japan, Taiwan and Korea; Abgenex's is North America.

Strategy To Strengthen Efforts

Cell Genesys Chairman and CEO Stephen Sherwin said formation ofAbgenix should "cast a spotlight on each of our two programs."

"We have been operating with two distinct product developmentpipelines, gene therapy and antibody therapy," Sherwin said. "Bothpipelines have multiple product candidates with significantcommercial potential and both have shown substantial progress inrecent months. The strategic concentration of resources should enableus to maximize the value of our novel technologies.

"Operating as separate entities will open up prospects for newcorporate alliances, expand the commercial opportunities worldwide,and provide greater and independent access to capital markets."

Cell Genesys already is in good position, with $80 million in thebank and a lucrative collaboration in hand with Hoechst MarionRoussel Inc., of Frankfurt, Germany. That deal, centered around CellGenesys' T cell gene therapy approach for AIDS, is worth up to $160million (see BioWorld Today, Oct. 11, 1996, p.1). Sherwin saidcancer is the next target area, with a lead candidate already identifiedand partnership discussions under way.

Abgenix's portfolio, meanwhile, includes an anti-epidermal growthfactor (EGF) receptor antibody for cancer applications and antibodiesto block molecules that cause inflammation, such as interleukin-8(IL-8), tumor necrosis factor (TNF) and L-selectin. The companysaid its products may be superior to others being developed thatcontain at least some mouse protein.

Japan Tobacco, of Tokyo, and its medical subsidiary, JT ImmunotechUSA Inc. in San Mateo, Calif., have produced antibodies to threeother, undisclosed targets, Sherwin said. Abgenix has rights toexercise options to those products in North America.

The IL-8 program, the lead one in development, preceded the newarrangement. For that product Abgenix will have rights at least inNorth America. Human testing could begin late next year, Sherwinsaid.

For the EGF receptor, TNF and L-selectin products, Abgenix willhave either worldwide rights or worldwide rights minus JapanTobacco's Asian territories.

To date Cell Genesys has received $38 million from Japan Tobacco.Their collaboration calls for committed funding into 1997.

R. Scott Greer, most recently senior vice president of corporatedevelopment at Cell Genesys, was named president and CEO ofAbgenix. The Xenotech Division of Cell Genesys, which handledpreclinical antibody research, will be phased out by the end of theyear. About 40 of Cell Genesys' 140 employees will transfer toAbgenix.

Cell Genesys' stock (NASDAQ:CEGE) gained 13 cents Thursdayand was unchanged Friday at $7.63. n

-- Jim Shrine

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

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