Editor

Last week's news of a planned $600 million cash buyout of SangStat Medical Corp. by Genzyme Corp. made headlines for its obvious virtues on both sides - but down the road an even bigger boon might be coming for the merged pair. It's a benefit that inspired phrases such as "medical revolution" and "whole new world" from Bill Martin, director of corporate communications for SangStat.

First, the terms of the deal. Genzyme intends to make an all-cash tender offer amounting to $22.50 per outstanding share, a premium of about 45 percent to the Aug. 1 closing price of SangStat's stock. Boards of both companies have approved the transaction, which is expected to be complete in early September.

The plainest value for Genzyme is SangStat's anti-thymocyte globulin sold under the name Thymoglobulin, a polyclonal antibody launched in the U.S. in 1999 as an immune system suppressant for acute rejection in renal transplant patients.

In many European countries, Thymoglobulin is approved for induction and treatment in solid organ transplants, and in some territories for graft-vs.-host disease, as well as for aplastic anemia. For that last indication, in Japan and certain other countries, SangStat markets an equine anti-thymocyte globulin called Lymphoglobuline, also indicated for graft rejection. Global sales of the pair of products have grown steadily, reaching $77.4 million last year.

The FDA has cleared two investigational new drug applications from SangStat to begin new studies of Thymoglobulin in living donor kidney transplant patients and in bone marrow transplants.

SangStat also promotes Gengraf, a generic cyclosporine co-marketed with Abbott Laboratories and sold by the same force that markets Thymoglobulin to the top 100 organ transplant centers - a nice fit with Genzyme, which has a renal business focused on Renagel (sevelamer hydrochloride), a phosphate binder for patients with end-stage renal disease on hemodialysis.

Another gain for Genzyme: SangStat's pipeline, especially RDP58, the anti-inflammatory peptide for gastrointestinal diseases, which complements Genzyme's CAT-192 for sclerosis.

RDP58, which inhibits tumor necrosis factor-alpha, interferon-gamma, interleukin-12 and IL-2, has proved positive in Phase II trials, and Genzyme said it will continue the conversations under way with would-be partners to develop the drug.

CAT-192, a human anti-transforming growth factor-beta monoclonal antibody, is being tested in a Phase II trial with partner Cambridge Antibody Technology Group plc for the treatment of diffuse systemic sclerosis. Genzyme also has candidates in the area of disease mediated by the immune system. GENZ 29155 for multiple sclerosis is expected to enter clinical trials by the end of the year and GC 1008 for pulmonary fibrosis (also partnered with CAT) is expected to do the same next year.

Monoclonal Cocktails Unlikely To Endure

But more gold may lie further ahead, in SangStat's deal begun last November with Therapeutic Human Polyclonals Inc., a privately held firm co-founded by Roland Buelow, who was SangStat's head of discovery research for 10 years. The other founder, now CEO of THP, is Wim van Schooten, formerly CEO of the Netherlands-based Upither BV, focused on autoimmune diseases.

The two-pronged deal involves working on a humanized version of the rabbit polyclonal Thymoglobulin, which could allow for repeat dosing in solid organ and bone marrow transplantation, as well as for diseases such as rheumatoid arthritis, multiple sclerosis, diabetes and lupus.

Part two of the arrangement focuses on humanized polyclonal antibodies for the treatment of hematologic diseases such as B-cell lymphomas, leukemia and other B-cell-related disorders.

Martin told BioWorld Financial Watch the aim is to create "a production herd of genetically engineered rabbits within the next year and a half to two years."

"They are very close," he said. If the company succeeds, "it will bring about a medical revolution like we saw when monoclonal antibodies were first humanized," Martin added.

THP notes that polyclonal antibodies have been employed in the clinic for more than a century. In the 1890s, polyclonals derived from horse and sheep were introduced as serum therapy for pneumococcal pneumonia, meningococcal meningitis, scarlet fever, diphtheria and measles.

But wider use has been held up by the immunogenicity of animal-derived proteins (xeno-polyclonal antibodies) in human patients - the same problem that bedeviled monoclonals until the early 1990s.

Making polyclonals in rabbits with its PolyTarg platform, THP boasts short development timelines, rapid scale-out and large-scale production, thanks to the animal's well-characterized immune system, which allows for a proven system of genetic engineering. THP's initial work will be in cancer and infectious disease.

"It's extremely big," Buelow told BioWorld Financial Watch of PolyTarg's significance. "Chickens would be interesting but the technology to do it isn't available yet. Transgenic rabbits have been running around for 20 years."

Another company, Hematech LLC, is trying something similar with cows, as reported in Nature Biotechnology last summer. The paper was titled, "Cloned transchromosomic calves producing human immunoglobulin." Hematech's approach is not quite the same as THP's.

"They're taking human immunoglobulin loci and putting them into cows," Buelow said. "The issue is, they have to make knockout cows and show that in the adult cow they get a diverse repertoire of antibodies. Only time will show."

Meanwhile, THP hopes to file for an investigational new drug application in 2005. "The breedings are ongoing," Buelow said. "Rabbits breed very fast, that's one of the reasons you want to work with them. With one pair, you can produce over 500 offspring in a year" - another advantage over cows, he said.

"We use a rabbit construct, a rabbit immunoglobulin locus," he added. "We use all the control elements that are in there, all the sequences the rabbit needs to do its gene conversion. We change just enough to make it human."

Antibodies, Buelow noted, "can be very diverse, against the virus or against one bacterium and another or against the cancer cell. This is essentially what humans and mice do - make these very large numbers of permutations. The mechanism in your body only gets triggered when there are many antibodies, when you reach a certain density."

That's why monoclonal antibodies "in most instances have been disappointing," Buelow said, acknowledging the major success stories: Rituxan, Remicade and Herceptin.

"We have a few that work, and the majority of them don't," he said. "When you go to cancer meetings today, [you hear] people are using cocktails of monoclonal antibodies. But we want to make the cocktails right away - which is a polyclonal antibody."

Speed and lower cost are key elements.

"We know there is a very large number of diseases where antibodies work, and if something like SARS came up, in six months you could have 20,000 doses," Buelow said.

The polyclonal approach might come just in time to rescue medicine from the cocktail-monoclonal strategy, he said, which is fraught with difficulty even though it is efficacious in some cases.

"From a regulatory point of view, it's an absolute nightmare," Buelow said. "My personal expectation is, it's not going to happen."