IDEC Pharmaceuticals Corp.'s stock jumped 24 percent Thursdayafter the San Diego company signed a potential $57 millionagreement, licensing its gene expression technology and a lead cancerdrug candidate for B cell lymphomas to Genentech Inc.

South San Francisco-based Genentech's up-front payments include a$5 million equity investment in IDEC and $4 million in licensingfees.

The equity investment involves the purchase of 1 million new IDECshares at $5 per share, which represents more than a $1 per sharepremium to IDEC's closing stock price Wednesday of $3.63. Thestock purchase would give Genentech about a 6 percent interest inIDEC.

IDEC (NASDAQ:IDPH) closed Thursday at $4.50, an increase of 87cents. Genentech (NYSE:GNE) was up 12 cents to $49.50.

The drug covered in the agreement is IDEC's anti-CD20 monoclonalantibody, IDEC-C2B8, for non-Hodgkin's B cell lymphoma. Itcompleted Phase II studies with positive results and Phase III trialsare expected to begin by mid-1995.

Genentech, which will co-develop IDEC-C2B8, also has agreed tomake additional equity investments of $17.5 million prior to U.S.approval of the drug. IDEC will share in profits from U.S. andCanadian sales. Genentech has exclusive marketing rightseverywhere else in the world, except Asia.

The collaboration includes the potential for another $30.5 millionfrom Genentech. Those funds would involve milestone payments forIDEC-C2B8 and options for extension of marketing rights to Asiaand expansion of the drug development program.

In expanding their drug agreement, Genentech would get rights totwo other B cell lymphoma drugs that are related to IDEC-C2B8 andare designed to deliver radiation to the tumors. IDEC-Y2B8 couplesthe anti-CD20 antibody with the radioisotope yttrium and IDEC-In2B8 uses indium.

Most of the $4 million licensing fee is for IDEC's gene expressionsystem using Chinese hamster ovary (CHO) cells to producerecombinant proteins. The technology is used in manufacturingIDEC-C2B8.

A `High Yield Approach'

IDEC's chief financial officer, David Ludvigson, said Genentech alsointends to evaluate the technology for producing other recombinantproteins it is developing.

"Our system is a high yield approach," Ludvigson said. "It's a systemwhere you get more useable product at reduce costs."

The agreement with Genentech is the second major deal for IDEC.The company has a collaboration with SmithKline Beecham, ofPhiladelphia, worth more than $50 million for development ofPrimatized anti-CD4 antibodies for rheumatoid arthritis. Primatizedantibodies are part-human and part-Macaque monkey.

The Genentech deal, Ludvigson said, provides IDEC with the fundsneeded to take IDEC-C2B8 through the FDA regulatory process.

IDEC-C2B8 is designed to bind to CD20 antigens on the surface ofmature B cells and trigger an immune response to destroy them.Because the drug does not target precursor cells, IDEC said once thetherapy is complete, the patient's bone marrow replenishes thenormal B cells.

In the Phase II studies reported last Oct. 22 of 34 B cell lymphomapatients treated with the monoclonal antibody experienced tumorshrinkage. Forty-seven percent, or 16 patients, exhibited either acomplete or partial shrinkage of tumors.

That response rate, IDEC officials have said, compared favorably tothe typical 44 percent rate for two often-used chemotherapeuticagents and the 35 percent rate produced by alpha interferon.

In signing the Genentech agreement, IDEC also said it repurchasedall rights to its lymphoma products from Merrill Lynch/MorganStanley L.P., a research and development partnership set up in 1988to provide $11.5 million in funding.

IDEC bought back the rights for 1 million shares of IDEC commonstock and $6.9 million worth of 10 percent dividend-accumulatingpreferred stock, which will convert to common stock March 15, 1997based on that day's market price. n

-- Charles Craig

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