Somatix Therapy Corp. said Thursday it signed an agreement withBaxter Healthcare Corp. in which the companies will jointly research,develop and commercialize T-body technology for the treatment ofcancer.Baxter, a subsidiary of Baxter International Inc. of Round Lake, Ill.,will make an up-front cash payment and purchase new Somatix(NASDAQ:SOMA) stock. A second equity investment and milestonepayment will be made after the first patient has been treated in a PhaseI trial.Before Phase III trials are started, the companies may form a 50/50joint venture to complete development and commercialization of thetechnology.Mark Bagnall, vice president and chief financial officer of Somatix,told BioWorld the cash and stock payments together are "not a hugeamount. It's in the one- to two-month cash burn rate for Somatix,"which is burning about $15 million per year. He said the subsequentequity and milestone payments would be in the same range."It may be small in terms of dollars, but in terms of what it means to usit's really a fantastic deal," Bagnall said. He characterized the benefitsof the deal in three ways: proof of the validity of the Somatixtechnology; the continuation of a relationship started with Baxter inNovember (to develop a gene therapy for hemophilia); and the fact thatit's a reversal of the ordinary collaboration, in which the smallercompany hands over its research and development to the largercompany for cash."This is somewhat different in that they worked on it and came to us toparticipate _ and they pay us," Bagnall said. "How do you turn thatdown?"T bodies are autologous T cells, genetically modified to expresschimeric receptors on their surface. They act by recognizing andbinding to unique antigens, in this case, on tumor cells, causing a cell-mediated immune attack.Somatix's part of the deal, Bagnall said, involves developing a second-generation vector system for the genetic modification of T cells.Baxter's strengths, as they relate to this program, are in T-bodydevelopment, isolation of lymphocytes, genetic modification and cellculture."We needed access to the vector technology," Cindy Collins, vicepresident of the business development group for the Gene TherapyUnit/Biotech Group of Baxter Healthcare, told BioWorld. "This wasnot a major program for Somatix. We felt it was an importantcomponent for them to share in the long-term profits of the jointventure."Somatix stock was up 31 cents Thursday to close at $6.50 per share.Bagnall said the company had $19 million cash as of March 31, andabout 15.3 million shares outstanding. n
-- Jim Shrine
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