Pfizer-Medarex deal aims to produce dozens of antibody-based drugs Posted Saturday, October 2, 2004 by arjuna
NewsDay.com
By LINDA A. JOHNSON AP Business Writer
September 20, 2004, 6:01 PM EDT
TRENTON, N.J. -- Pfizer Inc. is teaming up with a small biopharmaceutical company on long-term research in a promising area: making medicines using special antibodies that hone in on targets such as cancer cells and infections.
Medarex Inc. said Monday the 17-year-old company could receive more than $500 billion from Pfizer over a decade if the New York-based drug giant is able to turn antibodies produced by Medarex's genetically engineered mice into many successful drugs.
Shares of Princeton-based Medarex shot up as much as 17 percent on the news, then closed up $1.01, or 14.8 percent, at $7.84 on the Nasdaq stock exchange Monday. Pfizer shares dropped 73 cents, or 2.3 percent, to $30.99 in trading on the New York Stock Exchange. Both stocks saw heavy trading.
"It's a very significant deal for Medarex," partly because of the immediate cash infusion, said biotech analyst Brian Rye of Janney Montgomery Scott LLC.
"Psychologically, it's also important because for a small company such as Medarex, with no approved drugs on the market yet, to have the likes of Pfizer, the world's largest pharmaceutical company, make such a significant investment in your technology," he added.
Under the deal, Medarex faces no costs or financial risks and gets an initial cash payment of $80 million. Pfizer also will immediately buy about 6 percent of Medarex stock, or about 4.8 million shares, at $6.21 each. That was a slight premium over the trading price when the deal was hammered out last week, said Donald Drakeman, Medarex president and chief executive officer.
The big payoff could come down the road.
Over the next 10 years, New York-based Pfizer will try to find and develop up to 50 antibody-based drugs using Medarex technology. Including payments to cover research costs, license fees and milestone fees, Medarex would receive more than $400 million if all 50 products are approved, then would receive royalties in the 3 percent to 5 percent range on any sales, Drakeman said.
The technology involves special mice, genetically engineered by Medarex, so they have human genes that can tell their bodies to spew out many copies of human antibodies to attack substances injected into them, such as tumor cells.
That means any drugs Pfizer made from antibodies produced by Medarex, when given to a patient to fight disease, would not be rejected by the person's immune system, Drakeman said.
"The world's leading pharmaceutical company has decided that monoclonal antibodies are really an important part of their pipeline for the future," Drakeman said of Pfizer.
Pfizer would pick the diseases for which it would try to develop antibody-based drugs, but cancer is clearly a leading area.
Both companies have their own programs to develop a drug that would essentially rev up the body's immune system by blocking a molecule that functions as the system's emergency break. Medarex has a version, called MDX-010, that is in final-stage testing in people with late-stage melanoma, for which there is little treatment.
The two companies are retaining individual rights to develop their own products for the target.
While the partnership is a milestone for Medarex, it already has deals with other heavy hitters in the pharmaceutical industry using its mouse technology, including Johnson & Johnson, Eli Lilly and Company, Novartis Pharmaceuticals Corp. and Amgen Inc.