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LSBC Suspends Protein Delivery to Biosite; Might Seek Other Partner

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A patent and licensing dispute between Biosite and Xoma has disrupted a collaboration between Large Scale Biology Corporation (LSBC) and Biosite, and threatens to derail LSBC’s efforts to develop protein microarrays, company officials told ProteoMonitor last week.

Although Berkeley, Calif.-based Xoma has taken no legal action against LSBC, the company temporarily halted delivery of protein targets to Biosite, pending its own due diligence into the patent and license dispute. Company officials were tight-lipped about what course of action LSBC might take.

“We’re not going to comment on the merits of that case, but until we have completed our analysis of this it is prudent for us to suspend our activities with respect to Biosite,” said David McGee, chief operating officer for LSBC.

As part of a partnership announced in January of this year, Biosite agreed to manufacture antibodies using its phage display technology to protein targets that LSBC would deliver from its Human Protein Index, a library of 115,000 protein forms taken from 157 human tissues. LSBC, headquartered in Vacaville, Calif., began delivering protein targets in early spring, but last week announced that it was placing delivery of targets on hold while it evaluated the effect of the patent dispute between Biosite and Xoma on LSBC.

The dispute between Biosite and Xoma may affect LSBC because it involves Biosite’s license of bacterial cell expression technology from Xoma for use in phage display, a technique for generating antibodies to human proteins in phage-infected E. coli cells. San Diego-based Biosite originally negotiated three licenses for the technology in 1998 and 1999, in order to “operate freely” in the area of phage display, said Nadine Padilla, a spokeswoman for Biosite.

In May of this year, Xoma gave Biosite notice that it would terminate the licenses because it believed Biosite was “operating beyond the bounds of the licenses,” according to Xoma spokeswoman Ellen Martin. Xoma has alleged that Biosite was aware that its partners, including Morphosys, another antibody manufacturer, infringed on Xoma’s patents, and that Biosite sublicensed technology to its partners that it was not allowed to license under its agreement with Xoma.

The following month, Biosite filed suit against Xoma, seeking a preliminary injunction in US District Court for the Northern District of California, San Francisco Division, that would bar Xoma from terminating its licensing agreements with Biosite. Xoma countersued in July, arguing that Biosite had in effect infringed on its patents by allowing others to infringe, said Martin. In September, a judge dismissed Biosite’s request for a preliminary injunction, and agreed to hear Xoma’s patent infringement case before addressing Biosite’s claims, Martin added. The legal proceedings are currently scheduled for “case management” this quarter, a hearing that will determine when the suit will proceed.

The most recent ruling heightened LSBC’s concern with the case because the judge’s opinion seemed to indicate that Biosite had violated Xoma’s license, according to Padilla, Biosite’s spokeswoman. “LSBC comes into play because in the last ruling the judge inferred that Biosite had in some way conceded that they had violated Xoma’s licenses,” Padilla said, although she denied that Biosite had admitted culpability.

LSBC declined to comment on the nature of their evaluation of the dispute between Biosite and Xoma, but McGee made clear that LSBC would continue to develop protein antibody arrays — if necessary with another partner or alone. The contract with Biosite to produce antibodies is non-exclusive, and McGee indicated that LSBC has several other potential partners, although he declined to specify the companies.

“There are other companies that have technology in this field,” he said. “There’s a growing interest in this field, and we have some very novel technologies that we can bring to bear in the area of proteomics and protein production using viral vectors.”

However, the fact that LSBC chose to work with Biosite as their first choice may indicate that other partners are not as appealing. When asked whether there was any downside to working with other partners, LSBC’s McGee declined to comment.

Indeed, LSBC initially chose to work with Biosite because of their “throughput, cost, and high affinity of the antibodies that Biosite had,” said Winton Gibbons, an analyst with William Blair in Chicago who covers both Biosite and LSBC.

“Other partners may not have the same capabilities that Biosite had,” he said. Phylos and Somalogic also make antibody-like ligands for proteins, but “it’s just that high affinity antibodies are probably the most obvious, robust, and well-characterized kind of ligand for the proteins and Biosite had put together a fast, efficient, and inexpensive way of making [those].”

Biosite is most likely looking for a technical solution to the dispute by modifying its process for generating antibodies to avoid infringing on Xoma’s patents, Gibbons added. “It’s our understanding that Large Scale would go back to Biosite in a heartbeat if either Biosite found a technical solution or if Large Scale and/or Biosite was able to mitigate the risk in some way for Large Scale.”

McGee did not know whether the interruption of protein target delivery to Biosite would push back the timeline for offering LSBC’s protein chips to the market. “It’s much too early to conjecture on whether this would have any effect,” he said. “The bottom line is that this is a nonexclusive relationship and we’re continuing to proceed with our biochip program aggressively.”

— JSM