Drug Developer, Genentech in Licensing Deal

Agensys Inc., a small Santa Monica company working on treatments for cancer, plans to announce today a licensing agreement with biotechnology giant Genentech Inc. that could eventually be worth more than $90 million.

Agensys said that it granted Genentech exclusive rights to develop drugs and diagnostic tools aimed at two molecular targets believed to have a role in cancer.

Genentech, based in South San Francisco, is a leading developer of drugs that attack the molecular underpinnings of disease. The company’s colon cancer drug Avastin, for example, disables a molecule that tumors need to form blood vessels.

Agensys has identified more than 40 cancer targets but as yet has no drugs. Neither company would identify the targets in the deal.

Agensys would receive from Genentech payments at various milestones in the development process. Those payments could total more than $90 million if drugs aimed at the targets reach the market.

In addition, Agensys would receive royalties on diagnostic products and a share of profits on drugs that result from the agreement.

The amount does not include a seven-figure upfront payment that Agensys will receive from Genentech, said Agensys Chairman and Chief Executive Donald B. Rice.

Genentech also has agreed to invest a seven-figure sum in Agensys preferred stock. The privately held company was founded in 1997 by a group of UCLA academics and has 75 employees.

The deal provides Agensys with additional cash as it prepares to begin human tests of its first drug. Rice said the company planned to begin clinical trials of a cancer drug in 2005.

Rice said the company hasn’t decided which drug to test. But he said a leading candidate is a drug that targets PSCA, a molecule that appears to have a role in cancers of the prostate, bladder and pancreas.

Agensys had licensed the PSCA target to Genentech in 2000, but in 2002 Genentech decided to shift focus and returned the rights to PSCA to Agensys. Rice said Genentech had paid Agensys a total of $3 million under the PSCA deal.