Washington Editor

In a flurry of activity this week, Human Genome Sciences Inc. and its recently formed CoGenesys division agreed to a pair of out-licensing deals, and at the same time, the parent firm received a $5 million milestone payment as part of an older agreement.

"It's sort of happenstance that these came together in pretty much the same time period," Jerry Parrott, Human Genome's vice president of corporate communications, told BioWorld Today. "One way to look at [the out-licensing agreements] - and CoGenesys fits into this also - is the whole notion of monetizing assets that have value but that we are not likely to develop ourselves internally."

Instead, the Rockville, Md.-based company is more focused these days on its several nearer-term commercial opportunities. Those prospects were detailed Tuesday at the ongoing JPMorgan Healthcare Conference in San Francisco, where Human Genome also clarified its strategy for its lower-priority assets.

The company agreed to give Amgen Inc. exclusive worldwide rights to an unspecified human gene that could have applications in autoimmune diseases, immune deficiencies or suppression and cancer. As part of the arrangement, Thousand Oaks, Calif.-based Amgen also acquired nonexclusive worldwide rights for diagnostic products for human use based on the same gene.

In return, Human Genome will receive undisclosed compensation comprising an up-front payment and certain annual fees, as well as development milestone payments and royalties for therapeutic and diagnostic products.

At the same time, Human Genome's CoGenesys division gave PDL BioPharma Inc. certain exclusive worldwide rights to intellectual property for an undisclosed target antigen discovered by HGS. In exchange, CoGenesys, which recently was formed as a spin-off, is entitled to an up-front licensing fee, development milestone payments and royalties on future sales of antibody therapeutics developed by PDL against the target. Also, the Fremont, Calif.-based company will provide CoGenesys access to its antibody humanization technology platform.

"These products are licensed to them in a direct way, and they become responsible for it," Parrott said, although he added that the PDL deal provides for CoGenesys being "engaged in providing some support." He also said it was "reasonable" to assume the deals carry more back-weighted rewards due to the early stage of the products out-licensed.

Last month, Human Genome announced plans to spin off CoGenesys as an independent company to focus on the early development of certain gene-based product opportunities and the monetization of certain intellectual property and technology assets not likely to be developed by Human Genome. The parent firm plans to complete the transaction by the end of May, though in the interim, CoGenesys will remain an internal division pending completion of funding from outside sources. (See BioWorld Today, Dec. 15, 2005.)

"Can we develop these things internally - yes, we could," Parrott said. "But can we do them as quickly as CoGenesys can on its own, as an independent company out raising money from other sources? The answer to that is probably no."

For its foundation, CoGenesys is beginning with about 60 employees, a third of whom are doctorate-level scientists, an experienced management team and fully equipped research and manufacturing facilities. It also has a stream of product development opportunities flowing from Human Genome, which Parrott said would likely opt into a continued equity stake in CoGenesys after it completes the spin-off.

"That looks to be," he added, "the best opportunity for realizing the value of these early-stage assets."

Separately, Human Genome received the $5 million payment from GlaxoSmithKline plc after the London pharmaceutical firm filed an investigational new drug application to begin Phase I trials of GSK716155 for diabetes. The payment stems from a 2-year-old agreement that gave GlaxoSmithKline exclusive worldwide rights to develop and commercialize the product, which was previously called Albugon, for all indications. (See BioWorld Today, Oct. 27, 2004.)

The $5 million will be recognized as revenue for the last quarter, and at the JPMorgan conference, Human Genome said its full-year financial results for last year would be slightly better than previously forecasted. It also said it expects revenue to increase this year.

Human Genome plans this year to begin Phase III development of LymphoStat-B (belimumab) for lupus in collaboration with GlaxoSmithKline. Also, the company expects to start Phase III development of Albuferon (albumin-interferon alpha 2b) for chronic hepatitis C by the end of 2006, assuming positive interim Phase IIb results in the first half of the year. Among other late-stage products, Human Genome plans to begin Phase II development of HGS-ETR1 in combination with chemotherapy in hematopoietic cancers.

Lastly, the company hopes to book its first product sales if the U.S. government orders ABthrax (raxibacumab) for the Strategic National Stockpile. The product is a human monoclonal antibody to Bacillus anthracis protective antigen.

On Tuesday, Human Genome's shares (NASDAQ:HGSI) gained 30 cents to close at $10.27. PDL's stock (NASDAQ:PDLI) climbed 25 cents to $31.48, while shares in Amgen (NASDAQ:AMGN) fell $1 to $77.98.