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Biotech / Medical : Abgenix, Inc. (ABGX)

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To: Icebrg who wrote (268)	10/17/2003 7:52:50 AM
From: Icebrg	Read Replies (1) of 590

ABGX/AZN deal - no appetite for drug development. A look at the deal from the perspective of both companies. AstraZeneca. Why did they do it? Was it for the targets or for the tools? Clearly it wasn't for the targets as it seems that most of them are either not known yet or under the "control" of AZN. There is a possibility that some of the mAbs/targets that currently are in the portfolio of Abgenix might be included, but that didn't seem to be the main driver behind the deal. Normally a pharma wishing access to antibody technology would have negotiated a licencing deal, taken delivery of some mice and done the rest of the work themselves. AZN didn't take that route. They bought the complete package from Abgenix. From target to marketing approval with the exception of the late-stage clinical development which they would like to run themselves. Maybe they feel that they are too late into the game and that it would have taken too long and been too laborious to build up the expertise required in-house. To get everything including manufacturing services for a mere 100 mUSD seems to have been a good deal for Astra. Abgenix will take care of everything practical. AZN will just have to provide the target and Abgenix will do the "rest". Abgenix So, where will this leave Abgenix? Not looking too good I am afraid. In a way they are back at start, out-licensing their technology with some CRO- and manufacturing services thrown in. They will be compensated at going market rates for what they do, but I doubt there will be any rich royalty fees included in the agreement. Especially in those cases where the targets have come from AZN's collection. Withy & Co. have traded away the potential upside that can come from drug development for the relative security of having AZN paying a large portion of their bills. (And another part of the bill will indirectly be paid by Amgen). Evidently their early experiences from drug development were enough to convince them that this part of the business was too expensive and risky for their company. And that it was not enough to know how to create fully human antibodies to be successful in drug development. Instead they seem to be on their way to become a mAb-based super CRO providing all the services needed to convert a target into a mAb-based biological agent. Perhaps I am too pessimistic. Perhaps the recent deals just represent an effort to create a relatively secure platform on which to base future drug development efforts. For the time being it seems however to me as while a lot of the risk has disappeared a lot of the potential has gone the same way. Erik

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