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Scripps Research Institute to Reap Rewards Of Pfizer’s Planned Buy of Ab Rx Firm CovX

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Pfizer announced plans this month to acquire CovX, a biotechnology firm commercializing a new type of antibody-based therapeutic developed by scientists at the Scripps Research Institute.
 
Scripps, which holds an undisclosed royalty interest and equity stake in CovX, stands to receive both a percentage of the proceeds from the sale, as well as royalties from any resulting therapies based on the company’s catalytic antibody technology – which could eventually rival the multi-billion dollar therapeutic monoclonal antibody market, according to CovX’s co-founder and Scripps president Richard Lerner.
 
Financial terms of the acquisition have yet to be revealed. Pfizer said that the acquisition is subject to customary closing conditions, and is expected to close in the first quarter of 2008.
 
Pfizer said that CovX, based in La Jolla, Calif., will operate as a division of Pfizer’s new biotherapeutic and bioinnovation group. CovX also has offices in Dublin, Ireland, that will remain there.
 
CovX’s therapeutics are based on a technology that links therapeutic peptides to a class of antibody called catalytic antibodies – large, soluble molecules that recognize the transitional states of chemical reactions that occur in antibody-antigen interactions, and are able to catalyze these reactions much like enzymes.
 
In addition, catalytic antibodies remain in the body for long periods of time. Since many small-molecule drugs and peptides that may be potent against certain diseases are expelled from the body relatively quickly — sometimes too quickly to be therapeutically effective — the hybrid compounds combine the advantages of the two types of molecules, according to CovX.
 
CovX has generated three early-stage compounds based on the technology: one for diabetes, and two for oncology applications, which Pfizer said will strengthen its current drug pipeline.
 
The two oncology compounds, CVX-045 and CVX-060, have undergone preclinical testing and have been approved for human testing. Scripps said that CVX-045 is currently finishing Phase I trials, while CVX-060 was expected to enter Phase I trials by January. The diabetes compound is “close behind,” Scripps said, and another drug for an unspecified disease is expected to bolster the portfolio in 2008.
 
“The Pfizer acquisition will allow us to fully realize the potential of this approach,” Scripps professor and CovX co-founder Carlos Barbas said in a statement. “Within five years we hope to have more than a dozen new drugs in clinical testing.”
 
A New Class of Antibodies
 
CovX was founded in 2002 by Lerner and Barbas to bring the new class of catalytic antibodies to market. Lerner and Peter Schultz, then a professor at the University of California, Berkeley, had originally developed the underlying catalytic antibody technology in the 1980s.
 
CovX’s largest investor is Tavistock Life Sciences, a division of global investment firm Tavistock Group. To help get CovX off the ground, Scripps took equity in the company and royalty interests in exchange for a license to the technology.
 
Lerner told BTW that Scripps stands to gain financially from the acquisition and from royalties on products going forward, but could not disclose any details about its stake in CovX due to confidentiality agreements between the companies. A spokesperson for CovX declined to comment for this story.
 

“We think catalytic antibodies are going to be like antibodies. As of 1995, people were saying that antibodies would never be drugs, and of course they are now.”

Pfizer’s acquisition of CovX may give the startup’s compounds the resources needed for late-stage human clinical trials and commercialization. “The recent decision to seek buyers for CovX was spurred in part by the realization of the huge potential of the chemically programmed antibody approach, and the financing required to fully realize that potential,” Scripps said in a statement.
 
“The interesting thing about this is that this is the first commercialization of a catalytic antibody for human therapeutics,” Lerner told BTW. “We think catalytic antibodies are going to be like antibodies. As of 1995, people were saying that antibodies would never be drugs, and of course they are now, and people have been saying the same thing about catalytic antibodies.”
 
Lerner added that he would be “disappointed if there weren’t a variety of billion-dollar antibodies out of this deal” since the market for therapeutic monocloncal and polycloncal antibodies has produced similar results.
 
Various recent analyst reports have pegged the worldwide market for monoclonal antibodies at anywhere from $10 billion to $16 billion over the past three years, and have estimated that the market could rise to as much as $26 billion by 2010.
 
Benefit to Scripps Unclear
 
If Pfizer successfully brings human therapeutics based on the catalytic antibodies to market, it could result in a significant chunk of change for Scripps, which has an annual operating budget of approximately $350 million, making it one of the most well-funded independent research institutes in the US.
 
It is unclear how much income Scripps receives from its technology licensing agreements. Approximately one-quarter to one-third of its annual operating budget, or $87.5 million to $115.5 million, is derived from a combination of individual, corporate, and foundation philanthropy; licensing agreements; royalty income; and investment income, according to an institute spokesperson. In 2006, Scripps executed 109 licensing agreements for its technologies.
 
In September, the institute consummated an exclusive licensing deal with Los Angeles-based biotech Abraxis, which gave Abraxis the rights to eleven potential drug candidates called epothilones, microtubule-stabilizing reagents that bind to the tubulin pathway to inhibit the growth and proliferation of cancer cells (see BTW 9/10/2007).
 
The financial terms of that agreement were also undisclosed.

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