Two San Diego-based companies, Ixsys Inc. and BiositeDiagnostics Inc., are combining forces -- and technologies --under a two-year research and development agreement aimedat developing new drugs and better diagnostics.

Ixsys, a 2-year-old research-stage company that has stakedproprietary claims to three techniques for protein engineeringand for modifying and producing human monoclonalantibodies, plans to use Biosite's antibody-screening technologyto develop therapeutics for cancers, infectious diseases andimmune disorders.

Meanwhile, Biosite aims to use Ixsys' technologies to improvethe specificity of its MAbs-based diagnostics. "It will allow usto get skilled in the technology quickly," said Kim Blickenstaff,president and chief executive officer of Biosite.

Biosite last February launched Triage, a 10-minute screeningtest to detect seven of the most common drugs of abuse. It isprimarily used in emergency medicine and to a lesser extentfor employment screening. Triage is part of a planned family ofrapid, simple Immediate Response Diagnostic test products.

On the therapeutics side, "we haven't narrowed down yetwhich targets we'll go after," said Michael J. Hanifin, Ixsys' vicepresident of business development. Under the agreement, Ixsysreceives a non-exclusive license to certain Biosite technologiesthat have been developed by both companies under thecollaboration.

The agreement calls for Biosite to make an undisclosed initialpayment to Ixsys, which is also to receive undisclosed royaltieson sales of Biosite diagnostic products that incorporate Ixsys'technology. There is no provision for Ixsys to pay a royalty ontherapeutic products that could spring from the collaboration.

Much of Ixsys' technology is built around the research ofWilliam D. Huse, the company's founder and vice president ofresearch. A former Yale University School of Medicineprofessor, he served as vice president of research forStratagene Cloning Systems from 1986 to 1989.

Ixsys' technology arsenal includes:

-- The M13 phage system, which can produce human MAbs invitro. Ixsys has filed patent applications on the system. Anearlier generation of the system was the basis of an ownershipdispute between Ixsys and Stratagene, which was quietlysettled last March.

-- Codon-based mutagensis technology that allows researchersto rapidly adjust codons, the component of antibodies that codefor production of amino acids, to more closely configure to anantigen. It functions similarly to the natural process of affinitymaturization by which codons slowly adjust to an antigen.

-- An in vitro immunization technology, which can producehuman MAbs from a process that immunizes human spleencells with antigens. It was exclusively licensed last month byIxsys from the University of California.

"This is the first known system that consistently creates humanmonoclonal antibodies," Hanifin said.

The codon-based mutagensis technology could also proveimportant. "We can improve the affinity of an antibody in avery short period of time -- days or weeks," Hanifin said. Thepractical application of the technology on which Ixsys has fileda U.S. patent application is in higher antibody specificity, whichcould lead to better diagnostics and therapeutics, he said.

Ixsys received about $3.7 million in venture capital fundingfrom Medicus Partners, Domain Associates and DelphiBioventure Partners. The company is in the process of raisingan additional $4 million from an expanded roster of investors,Hanifin said. It is negotiating with two potential corporatecollaborators, he said. The company in June hired as presidentand chief executive officer James R. Tretter, a former presidentof Rhone-Poulenc Rorer Central Research group.

Biosite is focused in small-molecule diagnostic tests,Blickenstaff said. Besides its Triage drug-detection test thecompany has six other toxicology-based tests in developmentand is looking to expand into diagnostics for fertility andcardiac markers.

Founded in 1988 by several former researchers from HybritechInc. (now a part of Eli Lilly & Co.), it received venture capitalbacking from Domain Associates, Kleiner, Perkins Caufield &Byers, and Medicus Ventures. Blickenstaff declined to disclosesales or profits for the privately held company.

-- Ray Potter Senior Editor

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