Idec Pharmaceuticals Corp. announced Friday that it hasentered into a research and development collaboration withMitsubishi Kasei Corp. regarding its "primatized" monoclonalantibodies (MAbs). The agreement will focus on thedevelopment of primatized MAbs that are directed at the B7marker on certain immune system cells.
Idec (NASDAQ:IDPH) also announced Friday that it has filedwith the Securities and Exchange Commission for theregistration of 2.75 million new shares of stock in connectionwith a public offering.
Mitsubishi, a diversified Japanese chemical company thatmarkets recombinant t-PA and a hepatitis B vaccine in Japan, isIdec's second partner in its primatized MAb program.
Idec of San Diego will be reimbursed for its research expensesunder the collaboration and will receive developmentalmilestone payments and royalties on sales of any productsresulting from the partnership. While further financial detailswere not disclosed, David Ludvigson, Idec's senior vicepresident and chief financial officer, told BioWorld that the dealshould not be compared with the company's collaboration withSmithKline Beecham, which could earn Idec up to $50 million."This agreement was made at a much earlier stage," he said,noting that the company has not yet moved in to animal testingof the primatized B7 MAb.
During in vitro tests, however, Idec was able to identifyprimatized MAbs active against the B7 marker that appears onthe surface of antigen-presenting cells. B7, the companybelieves, is involved in interactions with T cells that ultimatelytrigger human immune response. Blocking B7, Idec believes,could be an effective tool in the therapy of autoimmunediseases such as systemic lupus erythematosus and idiopathicthrombocytopenic purpura, and transplant rejection.
Primatized MAbs are antibodies consisting of macaque monkeyand human components. The antibodies are intended to besimilar enough to human antibodies to avoid being recognizedas foreign by the human immune system. With many human-mouse antibodies, this recognition results in a human anti-mouse antibody (HAMA) response, which can render apotential therapeutic too toxic to use.
Idec is currently in Phase I testing of a primatized MAb thatacts against the CD4 antigen. The therapeutic, being developedas a treatment for rheumatoid arthritis, is part of acollaboration between Idec and SmithKline Beecham (SB). InOctober 1992, SB agreed to invest up to $30 million fordevelopment of the anti-CD4 MAbs, gaining co-marketingrights for the U.S. and Canada to any approved productresulting from the venture and exclusive rights to Europe andcertain other parts of the world. In February 1993, SBincreased its stake by up to $20 million.
Placing the Shares
Idec is working with Vector Securities International Inc. toplace the shares with certain institutional investors, Idec'spresident and chief executive officer, William Rastetter, toldBioWorld.
The placement is not a PIPE (private investment in publicentity) offering, however; the shares will be registered beforebeing sold to investors, Rastetter said. Unlike a PIPE offering, inwhich shares are placed with private investors before beingregistered for resale, Idec's offering vehicle represents alegitimate public offering. For that reason, Rastetter continued,the company is not subject to some of the limitations of PIPEs(for example, the requirement that no more than 20 percent ofoutstanding shares be sold).
Many investors will not participate in a PIPE offering, Rastettersaid, because it places limitations on their ability to freelyresell shares.
Rastetter said the financing vehicle that Idec has chosen allowsthe company to choose its investors and negotiate a placementprice as it would in a PIPE offering without suffering some ofthese disadvantages. He noted that the financing approach thecompany is taking has been commonly used for many years,albeit not in the life sciences sector.
Rastetter also said Idec's stock has been trading in relativelylow volumes recently, and that some prospective investorshave not been able to purchase the quantities of stock theywould like. Although a price for the offering has not been set,Rastetter said the company is looking at offering the newshares at close to $5 per share, or roughly their current marketrate. The would place the value of the offering at about $13.75million.
Idec currently has cash on hand of about $26 million, and isexpecting a burn rate of $4 million per quarter on an operatingbasis. The company now has about 9.4 million sharesoutstanding. Its last equity financing was in September 1991,when it raised net proceeds of about $48 million from the saleof 3.45 million shares at $15 per share.
Idec's stock closed at $4.88 per share on Friday, up 25 cents.
-- Karl A. Thiel Business Editor
(c) 1997 American Health Consultants. All rights reserved.