IDEC Pharmaceuticals Corp. signed a research and developmentagreement with Seikagaku Corp. of Japan Thursday that couldinvolve payments up to $26 million, including an upfront license feeof $1 million, $12 million in research and development funding overthe next four years and another $13 million linked to undiscloseddrug development milestones.

Using IDEC's proprietary `primatized' antibody technology, the twocompanies will focus on developing an antibody against the CD23antigen on certain white blood cells as a potential treatment forallergic rhinitis, asthma and other allergenic conditions. The anti-CD23 antibody is currently in the earliest stages of preclinicaldevelopment and has not yet been tested in animals.

Both companies will share the rights to all products, with IDECreceiving royalties on eventual product sales by Seikagaku.Seikagaku will market products in Japan and Europe while IDECretains marketing rights in the U.S.

The Seikagaku deal is IDEC's third research and developmentcollaboration involving its primatized antibody technology. InOctober 1992, SmithKline Beecham (SB) agreed to invest up to $30million for milestones met in the development of an anti-CD4primatized monoclonal antibody (MAb) to treat rheumatoid arthritis.SB then increased its milestone-linked stake by up to $20 million inearly 1993. So far, SB has paid out about $11 million in milestonesto IDEC, as well as ongoing research and development support.

In March of last year, IDEC teamed up with Mitsubishi Kasei Corp.,of Japan, to develop primatized MAbs directed at the B7 marker oncertain immune system cells. The size of that deal, which alsoinvolved research and development support and milestone payments,has not been disclosed.

Primatized antibodies are part-human, part-Macaque monkey.According to IDEC, they could be less immunogenic than antibodiesthat are part-mouse since the immunoglobulin of Macaques is closerto that of humans than murine immunoglobulin.

IDEC went public in September 1991 at $15 per share. That offering,which sold 3.45 million shares, grossed $48 million. The only equityoffering completed since the initial public offering was a directplacement of 2.8 million shares of common stock at $2.75 per sharelast June, grossing $7.7 million. At the end of 1994, IDEC had about$22 million in cash and a quarterly burn rate of $4 million.

However, according to IDEC spokesman David Ludvigson, IDEC'sburn rate will drop by $750,000 to $3.25 million per quarter as aresult of Seikagaku's support payments. "This deal is not anexpansion but rather funding of one of our R&D programs,"explained Ludvigson. "That's how you get the burn rate down."

On Thursday, IDEC's stock (NASDAQ:IDPH) closed at $2.81, up19 cents per share. n

-- Lisa Piercey Washington Editor

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