Cambridge Antibody Technology Group plc entered a three-way licensing agreement as part of a settlement of potential patent litigation, and at the same time licensed a product and technology in two separate deals.

CAT and Enzon Pharmaceuticals Inc. dropped pending opposition to each other's European patents in the area of "diabodies" as part of a newly formed arrangement that also includes Micromet AG. In return, CAT gained access to a single-chain antibody (SCA) patent estate jointly owned by Micromet and Enzon in exchange for access to CAT's antibody phage display intellectual property. SCAs are separate pieces of monoclonal antibodies, which are found through phage display, while diabodies are a class of small bivalent and bispecific antibody fragments.

"The whole issue was the fact that single chains are used in some of CAT's technology," Kenneth Zuerblis, Enzon's vice president of finance and chief financial officer, told BioWorld Today. "It's really complementary for us to come together as opposed to saying CAT can't use single chains to do some of their phage display. So we brought the two together, because a key component to phage display is using single chains."

The trio received rights to develop antibody-based therapeutic and diagnostic products based on research that taps one another's technology. And in the end, each party could receive royalties from resulting products developed with licensed technology.

"Single-chain antibody technology basically reduces single chains down to a much smaller format consisting just of the binding region, and it can be done through microbial fermentation," Zuerblis said. "This addresses some of the shortfalls with antibodies. More importantly, it allows it to be targeted to a whole new segment of therapeutics - shorter-circulating-life therapies."

On the other hand, monoclonal antibodies have longer half-lives. Because of the shorter half-lives of SCAs, they potentially can address more therapeutic areas.

Cambridge, UK-based CAT received options to develop therapeutic and diagnostic SCA products as well as broad rights to SCA-based technologies for research. The latter provision includes the right to sublicense to collaborative partners. Zuerblis said CAT's phage display technology is based on SCA technology, and CAT also gained a two-year option to license SCA technology for use in antibody microarrays.

"For areas where we're not going to come up with our own single chains, we're giving CAT the ability to screen their libraries to find single chains that can work for other people and license them," Zuerblis said. "In effect, they're doing licensing for us. And more importantly, we get access to CAT's libraries for development of our own compounds in combination with Micromet."

Munich, Germany-based Micromet and Bridgewater, N.J.-based Enzon will work within the parameters of their prior arrangement to use CAT's phage display technology to develop antibody products against a defined number of targets. The two also gained options to develop antibody products on their own, outside the scope of their collaboration.

Their multiyear deal, which combined their patents and knowledge to develop single-chain antibody therapeutics, includes equal sharing of research and development costs and an even split of revenues generated from technology licenses and commercialization of resulting products. Enzon also made an $8 million equity investment in privately held Micromet as part of the deal. (See BioWorld Today, April 12, 2002.)

"They have some complementary patents; we have the initial patent estate," Zuerblis said. "We brought the two companies together with a goal to identify two lead candidates in a two-year period, and we're working toward that."

Separate of the three-way dealings, CAT granted Micromet a nonexclusive license to MT201, a therapeutic cancer antibody specific to the epithelial tumor target EpCAM.

MT201, developed with CAT's phage display technology, is being co-developed with Milan, Italy-based Novuspharma SpA through a Phase II program scheduled to begin shortly.

Micromet received a worldwide license to all of CAT's antibody phage display technology patents, both pending and granted, to develop antibody-based products targeting the EpCAM antigen. In return, CAT will receive an up-front license fee from Micromet as well as milestone and royalty payments on human antibody-based products developed against the EpCAM target by Micromet and its partners.

CAT also granted Xerion Pharmaceuticals AG an option to license antibodies derived from its phage display libraries. The antibodies are directed against disease-associated protein targets characterized using Xerion's Xstream technologies.

The Xerion agreement follows an existing relationship established in a June 2001 deal involving the research use of CAT's libraries, after which the companies entered a joint research collaboration to investigate a target to treat allergic conditions. CAT would receive development-based milestone payments and royalties on antibody products developed by Xerion and its collaborators.

For its part, Enzon has two products about to enter Phase III studies - APG-Fresenius S for transplant rejection and PEG-Camptothecin.

The former product, already approved in Europe, was in-licensed from Fresenius AG, of Bad Homburg, Germany. Zuerblis said the late-stage studies needed for FDA approval would begin in the first half of next year, as would trials of PEG-Camptothecin for gastric and gastroesophageal cancer.

Other internal programs include additional PEG-enhanced products for a number of indications.

Enzon's stock (NASDAQ:ENZN) gained 24 cents Wednesday to close at $11.85. CAT's stock (NASDAQ:CATG) lost 25 cents to close at $8.75.