Hurting for cash and finding fund raising difficult, AltaRex Corp. locked down what CEO Richard Bagley called “a more permanent fix” last week by signing a licensing agreement with a wholly owned subsidiary of United Therapeutics Corp. for the majority of AltaRex’s cancer portfolio.

Couple that with a presentation made at the Experimental Biology conference in New Orleans Sunday that could point to new uses for the company’s platform technology, and Bagley’s biblical analogy could be apt.

“This deal really positions AltaRex as a platform company as well as a lead-product company with OvaRex,” he told BioWorld Today. “We are no longer nickel-and-diming the program to death, which in reality was what we were doing. We’re like Lazarus we’re coming back from the dead.”

The United Therapeutics subsidiary receives exclusive rights for the development and commercialization of five monoclonal antibodies the centerpiece being OvaRex worldwide, except in the European Union and certain countries for which AltaRex has previous agreements. Silver Spring, Md.-based United Therapeutics will pay for clinical trials, manufacturing and related development expenses. AltaRex stands to receive development-based milestone payments and “high-single- to low-double-digit” royalties on marketed products.

The actual numbers require some due diligence. United Therapeutics bought 4.9 million shares of AltaRex stock at a premium of 10 percent to a predetermined five-day market average for about $2.5 million. AltaRex issued a $50,000 convertible debenture to United Therapeutics (UTC) that is secured by AltaRex’s intellectual property. Also, AltaRex issued a warrant exercisable at UTC’s option into 3.25 million shares for about $1.6 million. AltaRex granted UTC a right to purchase a debenture worth $875,000. With shareholder approval, $441,690 of that would convert into 883,380 AltaRex common shares. The right to exercise the warrant and purchase the debenture expires on Aug. 20.

When fully digested, and assuming exercise of the warrant and conversion of the debenture, UTC would own 19.9 percent of AltaRex becoming its largest shareholder with the right to purchase 19.9 percent of certain future AltaRex financings. However, if UTC does not exercise the warrant or purchase the debenture, AltaRex could simply walk away.

Which Bagley said doesn’t appear likely.

“[UTC] doesn’t own 19.9 percent now, but it plans on getting there,” he said. “My feeling is, over the next several months it will become a 20 percent shareholder.”

AltaRex is a Canadian company and trades on the Toronto Stock Exchange under the symbol AXO. Its stock closed Monday at C72 cents, down C5 cents. Before the transaction, the company had about 37 million shares outstanding, Bagley said.

As for the milestones, AltaRex would receive $5 million for each approved indication for each of the five products: OvaRex, BrevaRex, ProstaRex, GivaRex and AR54. OvaRex, a murine monoclonal antibody, and BrevaRex are in clinical development - OvaRex in late-stage ovarian cancer trials. The other three are in preclinical development.

The deal relieves the serious financial stress AltaRex has been under. The company entered the year with about $5 million in cash. Less than one month ago, AltaRex disclosed that its cash situation was so dire it doubted its ability to make it to the end of April. The company contemplated several options, including acquisition, Bagley said, before deciding on the agreement with UTC. (See BioWorld Today, March 29, 2002.)

“Our company hasn’t been well capitalized,” he said. “Over the past five months, we’ve been trying to address this issue. We were constantly raising money in the marketplace and diluting our shares. We had very little access to capital we just couldn’t raise the money required to get OvaRex over the finish line.”

Besides the influx of cash and the research and development funding, UTC offers AltaRex intangibles. UTC’s Remodulin (treprostinil sodium) is designed to treat pulmonary arterial hypertension consistent with the treatment of both primary and secondary pulmonary hypertension in patients with New York Heart Association Class II through Class IV symptoms. The product received an approvable letter from the FDA in February. That experience with the FDA is something Bagley likes when considering OvaRex. (See BioWorld Today, Feb. 12, 2002.)

Bagley sees a mid-year discussion with the FDA that will “put in better perspective” how the companies can approach filing OvaRex’s rolling biologics license application. OvaRex has been granted both fast-track and orphan drug status by the FDA and the companies will seek accelerated approval in the U.S. on the basis of controlled Phase II/IIb studies. In Europe, where AltaRex still maintains rights, the company will seek approval by attempting to “bridge” its data and manufacturing information from the U.S., Bagley said.

At 30 employees before the deal, “about half to two-thirds are working for United now,” Bagley said. That further decreases AltaRex’s burn rate, but those employees still located at AltaRex’s base in Waltham, Mass. will be working on getting OvaRex approved.

Although most of its cancer portfolio now rests comfortably in the hands of UTC, AltaRex still has its collaboration with Epigen Inc., of Rochester, N.Y. That deal, struck in June 2001, focuses on developing antibody-based treatments for up to 12 cancers associated with the human carcinoma antigen. (See BioWorld Today, June 7, 2001.)

AltaRex will continue work with Epigen, as well as applying its technology platform to indications besides cancer most likely the infectious disease area first and perhaps autoimmune diseases, as well. The presentation made on Sunday by AltaRex and University of Maryland researchers showed AltaRex’s foreign antibodies facilitate and modify tumor antigen processing to trigger T-cell immunity, but the technology could be applicable to other afflictions.

“We drove home this idea of immune complexes turning on T-cell immunity [at the conference],” Bagley said. “And if you can do it in cancer, frankly, if this is as robust as it is in cancer, then it should be as robust in these other infectious diseases.”