Abgenix - ABGX
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Ray Withy: Abgenix's Man With A Plan
Abgenix Inc. may not be the only biotechnology company with big dreams, but it's certainly doing more than many to turn those dreams into reality. Long synonymous with monoclonal antibodies and the XenoMouse, the company is hoping to turn its technology leadership into a ticket to the big leagues.
Big changes are already underway.
On November 19, Abgenix announced that Raymond Withy – currently the company's president and COO – will replace R. Scott Greer as CEO, effective in mid-2002. Withy will also join the company's board of directors, effective immediately. Greer, who will stay on as chairman and continue to be involved in running Abgenix "at a more macro level," said the decision reflects the firm's continuing evolution.
"The level of success Abgenix achieves in its second five years will be a function of how well we execute on product development and business collaboration management," Greer said. "Both of these areas play to Ray's strengths."
Both are also key components of Abgenix's bold plan to transform itself from a technology supplier with a successful licensing business into a product company with a formidable pipeline of antibody-based therapeutics.
Greer began outlining this plan for Signals last year (see the Signals article "Companies Load Up On Magic Bullets"). In an interview in January 2001 (see the Signals article "Grand Ambitions"), he made bold predictions about clinical progress, promising that Abgenix would be supporting seven trials on four product candidates by year's end. Today, those predictions have come true. Given this remarkable progress and the imminent change in leadership at Abgenix, Signals decided it was a good time to get to know the man charged with following through on Greer's grand plan.
Raymond Withy
Withy and Greer have been working together for 10 years. Both men are veterans of Cell Genesys Inc., and both were part of the original team that led Abgenix's spin-off from that company in 1996.
"We have a common vision," Withy said.
That vision is of a company transformed from a small-but-intriguing technology licensing operation to a genuine biopharmaceutical powerhouse. It wants to see its name on pharmacy shelves. That dream is hardly unique among biotechs, but Withy says Abgenix has four important things going for it: compelling technology, a strong management team, a clear plan and the money to make it all happen.
2000 was a good year for Abgenix. The company raised more than $1 billion from the public and private capital markets (including some $250 million for shareholder and parent Cell Genesys). Its stock split twice and its market cap doubled. It also made some important acquisitions that fortified its position as a leader in antibody technologies.
This year, the company started spending that money in a big way.
Those looking for proof that Abgenix is serious about ramping up need look no further than its balance sheet. Abgenix ended the third quarter of 2001 with $540 million in the bank, another $67 million of equity in collaborations and essentially no debt. It is right on track to lose between $50 million and $60 million this year, despite contract revenues of $30 million to $35 million.
Instead of going into the bank, that money is going to fund an ambitious growth plan with four key objectives: developing proprietary products, selectively out-licensing antibody-generation technology, managing risks through product and indication diversity, and maintaining technology leadership in the antibody arena.
Right now, the focus is on filling the pipeline.
"This is all about product," Withy said.
Abgenix will rely heavily on its partners for new targets to fuel this pipeline expansion. Because of deals with companies like CuraGen Corp., it already has access to hundreds of them, but Withy said Abgenix must continue to pursue new targets to stay ahead of the competition.
In some cases, these target-sourcing collaborations with proteomics and genomics companies include product co-development agreements. Such deals help Abgenix maintain a healthy licensing business while pursuing loftier goals. The work may be less profitable, but it is also far less risky. That sort of security can come in handy when you are contemplating a leap off the high board.
In an effort to retain its technology edge, Abgenix is also pursuing some 30 target-focused collaborations with academic institutions. Most of these concentrate on oncology and inflammation – what Abgenix sees as its core competencies – but some focus on other areas, such as infectious diseases. Additional basic science collaborations are also ongoing.
On November 26, Abgenix signed an exclusive licensing deal with Duke University Medical Center and The Johns Hopkins University for EGFrvIII, a potential new target for cancer treatment. It is part of the family of epidermal growth factor receptors that also includes EGFr, the target of Abgenix's existing ABX-EGF monoclonal antibody, but could prove a much more specific target.
Abgenix is continuing to buy companies with compelling technologies. On November 13, it announced the acquisition of Hesed Biomed Inc., a leading developer of catalytic antibodies. Unlike regular monoclonal antibodies that bind to a target once and render it temporarily inactive, a catalytic antibody permanently inactivates its target molecule and goes on to locate and cleave other identical targets as it circulates through the body. This could translate into greater clinical activity and lower costs for antibody-based therapeutics.
Alliances are another important source for new product technologies. On November 2, Abgenix announced an agreement with Gliatech Inc. that gives it exclusive rights to develop and commercialize anti-properdin antibody therapies for all indications. Pre-clinical models indicate this is a promising approach to the treatment of acute inflammatory conditions.
Approximately 80 percent of Abgenix's operating resources are now devoted to in-house clinical and pre-clinical programs. The company currently has five products based on its antibody technology in clinical trials – three of its own and one each with Pfizer Inc. and Amgen Inc. While Withy would not disclose the target of the Amgen product, he said Pfizer is working on a cancer antibody.
Abgenix also plans to go to clinic with another in-house product around the end of this year. That would give the company a total of six products in the pipeline. But, according to Withy, this is only the beginning. "Our goal – next year and beyond – is to file two new INDs each year."
PRODUCT TARGET INDICATION STATUS PARTNER
ABX-IL8 IL-8, an inflammatory cytokine Psoriasis Phase IIb enrollment to be completed this year and results reported in Q2 of 2002. Phase III trials could begin as early as 2003 if current efforts to reformulate the drug are successful. None
ABX-IL8 IL-8, an inflammatory cytokine Rheumatoid Arthritis Phase IIa is fully enrolled and results are expected as early as January (this is a proof-of-concept study for this indication). None
ABX-IL8 IL-8, an inflammatory cytokine Chronic Obstructive Pulmonary Disease (COPD) Phase IIa enrollment to be completed by Q3 of 2002. Data may be available as early as Q1 2003. None
ABX-EGF epidermal growth factor receptor (EGFr) Kidney Cancer Phase II trials underway under the direction of Abgenix. Results are expected by mid-2002. Immunex
ABX-EGF epidermal growth factor receptor (EGFr) Non-Small-Cell Lung Cancer (NSCLC) Phase II trials underway under the direction of Immunex. Immunex
ABX-EGF epidermal growth factor receptor (EGFr) Other EGFr-expressing cancers Abgenix expects to initiate Phase II trials for a third indication by Q1 of 2002 and plans to start two more Phase II studies by the end of 2002. Immunex
ABX-CBL CBL antigen (CD147), which is upregulated on activated immune cells Steroid-resistant Graft Versus Host Disease (GvHD) Enrollment for ongoing Phase II/III study to be completed by the end of 2002. Data should be available by Q1 2003. SangStat Medical
ND ND ND Plans to file a fourth IND for an Abgenix product between now and January 2002, but is not divulging details. None
ND CD45 isoform RB* Auto-immune diseases Collaborating with Research Corporation Technologies (RCT) to develop human monoclonal antibodies for CD45RB. Pre-clinical studies conducted by RCT have shown promise in mice and monkey models. None
ND properdin, a complement protein* Chronic inflammation diseases Collaborating with Gliatech Inc. to develop human monoclonal antibody therapies capable of selectively blocking the action of this complement protein. None
* These products are among the four candidates for two in-house IND slots Abgenix plans to fill in 2002.
Withy predicted Abgenix's development partners will file another three INDs annually. Between itself and its partners, the company expects to have 11 product candidates in clinical trials by the end of 2002 and 18 in the clinic by the end of 2003. Of these at least seven will be in either Phase II or Phase III trials in 2002, with 11 or more in Phase II or Phase III trials by the end of 2003. Withy estimated that these candidates will be evaluated for over 20 different indications.
He acknowledged the plan is audacious.
"This scale of pipeline growth is unprecedented in the biotech industry," Withy said. "What we're really doing is creating a portfolio of products."
Abgenix is even negotiating a significant expansion of its existing contract with the U.S. military to develop monoclonal antibodies capable of countering the new threat of bioterrorism.
The goal of all this work is pipeline diversity. While some early biotechs, like Amgen, were able to propel themselves out of the primordial soup with a couple of products, that has become an increasingly rare occurrence. Withy believes the only companies with a real shot at the big time today are those that have a broad product platform. That is the kind of company Abgenix is working hard to become – one with enough products in its pipeline to cover the inevitable failures.
"Either that, or you're just rolling the dice," Withy said.
Abgenix begins looking for partners for products once their efficacy has become clear – generally at or near the end of Phase II trials. That allows the company to command better percentages, Withy explained.
By way of example, he pointed to the 50-50 deal Abgenix inked with Immunex Corp. last year to develop ABX-EGF, a fully human monoclonal antibody that targets the epidermal growth factor receptor (EGFr) which is over-expressed on a variety of cancers.
"The target was well known, the biology clear," Withy said. "That makes our model work."
While Withy admitted the Immunex deal was pretty plum, he said Abgenix believes it can negotiate similar terms for other promising products, such as ABX-IL8, a fully human monoclonal antibody that targets IL-8, an inflammatory cytokine. The drug is already in clinical trials for three indications: psoriasis, rheumatoid arthritis and chronic obstructive pulmonary disease (COPD). Abgenix plans to complete Phase IIb enrollment for the psoriasis study before the end of this year and expects to report results sometime in the second quarter of 2002. Withy is confident Abgenix will find a development partner for this indication by the end of 2002. He is also confident his company will be able to retain a significant financial interest in the drug.
The best way to do that is by investing in that region of the product development chain where Abgenix can add the most value for the money it spends – early-stage development. Withy still believes that partnering with pharmaceutical companies is the best strategy for taking his products into Phase III clinical trials, producing them, marketing them and capitalizing on them.
While fat percentages are nice, they are not the only things Withy is looking for in deals today. A good deal, he said, is one that allows Abgenix to retain co-promotion rights.
Again, the Immunex deal is an example. It gives Abgenix the option of exercising a 50 percent co-promotion right. These rights will become very important when Abgenix decides to forward integrate and become a full-fledged biopharmaceutical company.
"Ultimately, we will be forward integrating," Withy said. "The question is one of timing."
Triggering these co-promotion rights would give Abgenix a ready-made portfolio. Add a sales force, said Withy, and you are ready to go.
Where Abgenix would go if it could remains an open question. Withy said the company would likely forward integrate into one of the markets where it feels particularly competent, such as oncology. However, he also stressed that the firm is still a long way from making such a bold move.
Abgenix will not leap before it is ready, Withy promised. And he knows better than most just how much still needs to be done before the company is ready.
"The ongoing challenges will be operational – to make it all work," Withy said.
By the end of 2001, Abgenix hopes to have some 350 employees on the payroll. By the end of 2002, Withy expects that number to have doubled. Growing that much that quickly could pose some serious problems for any company, let alone one that credits much of its success to the quality of its employees. The secret, Withy said, is to build around a solid management framework – a framework he said is already in place at Abgenix.
"Increasingly, it's all about teamwork," Withy said. "We have built a superb team."
Production is another major hurdle Abgenix will have to overcome, though the company is well on its way to clearing it. Right now, Abgenix relies on Lonza Biologics for contract production, but it has already begun work on its own 100,000-square-foot manufacturing plant in Fremont, CA.
The facility is scheduled to go online by the end of 2002. When it does, Withy is confident Abgenix will have enough capacity to handle all of its own clinical needs, as well as a good bit of client work. The plant will even be big enough for commercial-scale production, should the need arise.
The company has invested heavily in developing process sciences and manufacturing technologies. Withy said that Abgenix will be able to offer an integrated solution that covers everything from antibody discovery through the production of materials, once the new plant is up and running.
"I think we are definitely ahead of the curve on manufacturing," Withy said.
While the transformation going on at Abgenix today is certainly a radical one, Withy said it also reflects the changing nature of the biotechnology industry as a whole.
"There are many more product opportunities," he explained. "The balance of power has changed somewhat between pharma and biotech."
Companies on both sides of the equation are starting to focus on what they do best, Withy said. There is more collaboration, and more "win-win" deals are starting to emerge as the two industries learn to play to each other's strengths. For biotech, that means innovation. For pharma, that means everything from Phase III enrollment to the pharmacy shelf.
"In that regard, we have a lot to learn from pharma still," he said.
Abgenix is trying to be a good student. One day soon, Withy is convinced the student will be ready to challenge the master.
"I've never been more excited about Abgenix," Withy said. "It's a very exciting time."
originally published 11/28/2001 |
