Abgenix also started Phase I clinical trials of a new drug announced in February of this year called ABX-PTH, a fully human monoclonal antibody that targets and neutralizes the action of parathyroid hormone (PTH) for patients with secondary hyperparathyroidism (SHPT), a chronic disorder observed in patients with kidney disease. The trial initiation follows acceptance of an Investigational New Drug (IND) application by the U.S. Food and Drug Administration (FDA). Companies such as CuraGen, the pharmaceutical arm of Tokyo, Japan-based Kirin Brewery Co. Ltd (Tokyo Stock Exchange TSE:2503), UK-based AstraZeneca (NYSE ADS: AZN) and Pfizer (NYSE: PFE) license technology from Abgenix.

Protein Design Labs, based in Freemont, CA, uses molecular biology to fuse the specific binding portion and certain amino acids from a mouse antibody with a human antibody, resulting in a “humanized antibody” that retains the desired binding specificity while suppressing an immune response. Seven licensed and marketed antibody therapeutics products under Protein Design Labs’ humanization patents generate royalties to PDL including Zenapax® by Roche (OTC RTS: RHHVF) to fight kidney transplant rejection, Mylotarg® by Wyeth (NYSE: WYE) for acute myeloid leukemia, Synagis® by MedImmune (NASDAQ: MEDI) for respiratory syncytial virus (RSV), and Herceptin® for Metastatic breast cancer, Xolair® for moderate to severe persistent asthma, Raptiva™ for chronic moderate-to-severe psoriasis and Avastin™ for colorectal cancer by Genentech (NYSE: DNA) and its partners.

Daclizumab, is a humanized monoclonal antibody from PDL that prevents the activation of the inflammatory response common to transplant rejection and autoimmune and inflammatory diseases. Daclizumab is in Phase II for moderate to severe ulcerative colitis and is being investigated in key inflammatory and autoimmune diseases, including asthma and multiple sclerosis with enrollment into two new studies scheduled to begin by early 2005. 

Other PDL therapeutic antibodies being developed include visilizumab (Nuvion®) in Phase I/II for severe ulcerative colitis, fontolizumab (HuZAF™) in Phase II studies for Crohn’s Disease, Anti- a5ß1 Integrin (M200) in Phase I for solid tumors, and Anti- a5ß1 Integrin Fab (F200) for age related macular degeneration.

Princeton, NJ-based Medarex uses their proprietary UltiMAb® Human Antibody Development System to create fully human monoclonal antibodies, with 100% human protein sequences, by using transgenic mice in which mouse antibody gene expression is suppressed and replaced with human antibody gene expression so that their mice contain genes encoding human antibodies. 

Therapeutics based on fully human antibodies are less likely to be rapidly eliminated from the human body, potentially reducing the frequency and amount of dosing. Nineteen antibodies from Medarex are currently in human clinical trials or have had applications submitted for trials for a wide range of diseases, such as cancer (including breast, ovarian, prostate, lymphoma and kidney tumors), rheumatoid arthritis, multiple sclerosis and other inflammatory and autoimmune diseases. 

Medarex owns 25% of Copenhagen, Denmark-based Genmab (CSE: GEN), which has licensed antibody therapies for rheumatoid arthritis, psoriasis, and other conditions. Medarex is in partnerships with other pharmaceutical and biotech firms including Kirin, Bristol-Myers Squibb Co (NYSE: BMY), Centocor, a wholly owned subsidiary of Johnson & Johnson (NYSE: JNJ), Novartis (NYSE ADS: NVS) and Eli Lilly and Co (NYSE: LLY).

Last month, Medarex announced a deal with Bristol-Myers to develop the Medarex drug MDX-010 for melanoma, a potentially deadly skin cancer, and against a range of other types of tumors. The drug is now in Phase III late-stage trials.

According to Reuters, under that deal, Donald Drakeman, Medarex's chief executive, said Medarex is entitled to keep 45 percent of profits from sales of the drug if it is approved. "We believe a new cancer product like MDX-010 could be a big blockbuster, with potential multibillion-dollar sales, because we have seen promising preliminary results in a number of other tumor types," Drakeman said. Drakeman said the company's experimental drug against prostate cancer, called MDX-070, "is another blockbuster opportunity," with potential annual sales of more than $1 billion. He said Medarex expects to report Phase II trial results of the drug next year.

Non-traditional MAbs by “phage display” - Cambridge, UK-based Cambridge Antibody Technology (NASDAQ ADR: CATG) has proprietary methods for the engineering of bacteriophages (viruses that infect bacteria) to display human monoclonal antibodies on their surface which it uses in the design and development of antibody-based therapeutics, one of which is Humira for Rheumatoid arthritis sold by Abbott Labs (NYSE: ABT). 

The two companies have been in dispute since last year over the royalties Abbott pays to Cambridge Antibody. Abbot had interpreted a royalties agreement to mean it should pay 2% of net sales, while Cambridge Antibody had claimed the deal meant it should receive 5% of net sales. This week, a U.K. High Court judge ruled in favor of Cambridge Antibody. Abbott said it will appeal the ruling but the appeal will not be heard until late January 2005.

Investment Opportunities in the Biotech-MAb Sector  - MEDX is one of the MAb sector's best performers this year with a year-to-date return of over 65 percent, compared to the 10 percent return of the AMEX Biotechnology Index (AMEX:$BTK.X). With a promising pipeline of Mederex's and its partners' antibodies in clinical trials as well as a stream of milestone payments and royalties from pharmaceutical and biotech firms, we believe that Mederex's shares could again outperform the AMEX BTK index next year.

Protein Design Labs is expected to narrow its losses to between $52 million to $57 million next year due in part to royalties from two potential blockbuster drugs, Avastin from Genentech and Tysabri, a multiple sclerosis drug from Biogen Idec (NASDAQ: BIIB). According Biogen Idec, Tysabri could expand the current MS market to $US 6 billion from $US 3.6 billion over time.

Tysabri is also currently in Phase III clinical trials for bowel disorder Crohn’s disease, and in Phase II for rheumatoid arthritis (RA). If the clinical trials  become successful, we believe that Tysabri could be a potential RA treatment with little or no serious heart-related effects, substituting for drugs such as Vioxx, Celebrex and Naproxen. PDLI shares, which performed in-line with the AMEX BTK index this year, could rise substantially next year as the Tysabri drug establishes growing usage.

According to their recent SEC filing, Abgenix's net losses amounted to $102.2 million in the six months ending June 30, 2004. In October 2003, AstraZeneca entered a multi-year partnership with Abgenix for the joint discovery and development of therapeutic antibodies for up to 36 cancer targets. As part of the partnership agreement, AstraZeneca will make a $100 million investment in Abgenix convertible preferred stock, initially convertible into Abgenix common stock at $30 per share. Upon the achievement of certain milestones, Abgenix may also require AstraZeneca to invest an additional $60 million in Abgenix convertible preferred stock. This month, the company plans to sell $150 million worth of convertible senior notes due in 2011. 

Wall Street analysts believe that biotech companies such as Abgenix will become profitable, but not earlier than 2008. This year, Abgenix's shares underperformed the AMEX BTK Index by as much as 25% and currently have a "neutral" rating. Share prices could very much depend upon the successful development of ABX-EGF, a cancer drug in a market which is presently dominated by ImClone System's ERBITUX. (NASDAQ:IMCL).

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