NeoRx picks partner for support of monoclonal antibody effort

June 9, 2003

NeoRx readied itself for a quick--and well-financed--commercialtakeoff last week with the signing of a cooperative letter ofintent with Boehringer Ingelheim. The German pharmaceutical firmwill manufacture NeoRx's first monoclonal-antibody-based

NeoRx readied itself for a quick--and well-financed--commercialtakeoff last week with the signing of a cooperative letter ofintent with Boehringer Ingelheim. The German pharmaceutical firmwill manufacture NeoRx's first monoclonal-antibody-based nuclearimaging agents and help sell NeoRx products outside the U.S. onceregulatory approvals are obtained.

The Seattle biotechnology firm chose a relatively low-riskpath to the market in aligning itself with a large and establisheddrug company. NeoRx has scaled back its own non-research operationsdrastically over the last two years as it awaited product marketingapproval by the Food and Drug Administration. The firm acknowledgedit was seeking a large pharmaceutical business partner followingthe initial cutbacks in 1990 (SCAN 9/12/90 and 1/16/91).

Relying on the financial, manufacturing and marketing resourcesof an established drug company reduces the risk from potentialsetbacks by the FDA. Monoclonal antibody competitor Centocor experiencedthat sort of risk firsthand earlier this year when the FDA provedless amenable than expected to approving the firm's Centoxin septicshock therapy agent. Centocor had geared up operations in anticipationof approval and was slapped by investors when the FDA turned sour.President and CEO James E. Wavle resigned shortly thereafter.

Centocor has since indicated its intention to rely more onalliances with major pharmaceutical partners. The company hadalready arranged to sell Myoscint, its first monoclonal imagingagent, for cardiac applications in the U.S. through McNeil Pharmaceutical,a Johnson & Johnson subsidiary (SCAN 7/19/89).

Part of Centocor's internal expansion involved the acquisitionof NeoRx's previous antibody manufacturing contractor, Invitronof St. Louis (SCAN 12/26/90). This purchase shook up the NeoRxsupply relationship and sent that firm looking for a new partner.NeoRx was determined not to work with another contract MoAb firmin the future, said Paul G. Abrams, president and CEO.

"We had rather stringent criteria for what we were lookingfor (in a business partner). We were not looking for a contractmanufacturer because those companies have not tended to do welland remain stable. We were looking for a pharmaceutical companywith the expertise and capacity for scaling up (the growth of)mammalian cells, so they could produce the antibody," Abramstold SCAN. "We also wanted (a partner) interested in marketingthe products in some territories, so that they would have a vestedinterest in their success."

NeoRx has actually been talking with Boehringer Ingelheim forabout a year, Abrams said. The firms were confident last fallthat a deal would be clinched; Boehringer Ingelheim began preparingfor production at its Biberach, Germany, subsidiary, a companycalled Dr. Karl Thomae GmbH.

Boehringer Ingelheim entered talks a year ago on a similartype of partnership with another MoAb competitor, Immunomedics(see story, page 2), but the discussions collapsed several monthslater (SCAN 2/27/91).

The German firm, based in Ingelheim on the Rhine, has shownan interest in building bridges to U.S. imaging agent developersfor several years. Three years ago, Boehringer Ingelheim signeda licensing agreement with perfluorocarbon-based contrast developerAlliance Imaging of San Diego (SCAN 2/28/90). Alliance receiveda positive FDA panel recommendation last month for its first product,Imagent GI, an oral MRI agent that darkens the bowel and improvesabdominal images.

NeoRx has had positive indication from the FDA regarding itsfirst application for small-cell lung cancer imaging with itsOncoTrac cancer targeted agent. An application for use of thatagent in imaging melanoma has also been made with the FDA.

NeoRx must asssure the FDA that Boehringer Ingelheim can manufacturethe antibody up to standards and identical to the product usedin clinical trials. The German firm has already received manufacturingapproval for other products from regulatory agencies outside theU.S., Abrams noted.

NeoRx is waiting behind both Centocor and Cytogen for the firstFDA approval of a monoclonal-antibody imaging agent. Approvalshave already been granted in several European countries. Japanwill likely move fast when the FDA gives its authorization tothe technology.

In addition to its manufacturing expertise, Boehringer Ingelheimoffers strong hospital marketing connections in both Europe andJapan. The firm actually has a larger sales force in Japan thanit does in Europe, Abrams said.

Boehringer Ingelheim is Genentech's licensee for TPA and GammaInterferon outside the U.S. and Japan, he said. These biotechnologyproducts will give the firm oncological expertise that shouldbe helpful in working with OncoTrac.

NeoRx will also receive an infusion of cash from the agreement.Initially, Boehringer Ingelheim will invest $11.6 million in NeoRxcommon stock and will be given warrants for the possible purchaseof $11.9 million in additional equity. Furthermore, the drug companywill invest $10 million in setting up antibody production forNeoRx.

"That is $10 million we otherwise would have to spend,"Abrams said.

NeoRx's marketing plans are not as firm. Mallinckrodt Medicalhas been granted exclusive pharmacy distribution rights in thismarket. This relationship has not changed. NeoRx would like tocombine this distribution with direct sale of its agents in theU.S. but is also considering other partnerships, he said.

"We believe that, long-term, a company like ours shouldseek to be vertically integrated, but we don't believe it alwaysmakes sense to do that all at once," Abrams said.