Antibody Therapy

The Hu MAb Mouse from Genpharm

Nils Lonberg

Abgenix

Bispecific Antibodies

Donald Drakeman

Lisa Drakeman

The Pritzkers and Bay City Capital

Corrections or additions?

This article was published in U.S. 1 Newspaper on November 17,

1999. All rights reserved.

Mom & Pop Management for a Hot Biotech

This mouse doesn’t roar. It just does its job —

manufacturing a therapy for almost any disease. Vaccinate this special

mouse with a diseased cell, and the mouse can create antibodies to

fight that disease. Let one of those antibodies multiply, and it will

produce quarts and gallons of disease-fighting antibodies to cure

human patients.

Medarex owns this special drug discovering mouse, plus several

thousand

like it, and licenses them to pharmaceutical companies. Medarex, a

biopharmaceutical firm that has just resurfaced in Princeton, also

does its own research on monoclonal antibody-based therapeutics that

can fight diseases. (Monoclonal antibodies bind selectively with a

villain cell, such as cancer, without affecting healthy neighboring

cells and with minimal side effects.)

In 10 years Medarex has grown from a $3 million private company with

shaky financial underpinnings to a $300 million public company with

an encouraging future. The biopharmaceutical firm was formed at

Dartmouth

in 1987, opened at 20 Nassau Street in 1989, went public and moved

to Chambers Street in 1991, left town to set up in Annandale in 1995,

bought a genetically perfected mouse in 1997, and has just moved its

corporate headquarters back to Princeton, to Princeton Gateway at

707 State Road. It trades on Nasdaq as MEDX.

As the CEO of Medarex, Donald L. Drakeman presides over this rodent

kingdom, and he believes the drugs developed from these mice could

revolutionize treatment for hundreds of diseases. His partner in this

revolution is his partner in life, Lisa Natale Drakeman, senior vice

president for business development. The Drakemans are trying to push

their technology to the top of the heap: "We think that human

monoclonal antibodies will be the dominant drug technology over the

next 10 years, and we want to be the leader in trying to do that,"

says Don Drakeman.

"We established a very strong technology with the mouse we

trademarked

as the Hu-MAb Mouse, and we now have 14 partners with that technology

and use it inhouse as well," says Lisa Drakeman.

Since the Drakemans and Medarex’ chief financial officer, Michael

A. Applebaum, live in Princeton, the move to Princeton is going to

save lots of time, but it was triggered by the landlord’s decision

to take back some space that Medarex was leasing in Annandale. The

move will be good for business reasons as well personal ones, says

Lisa Drakeman. "We are trying to put this mouse technology in

as many hands as possible, and it will help to be here in the thick

of the New Jersey biotech industry and convenient to financial

markets.

It is close to downtown, and people can get to transportation

easily."

She worked with Buzz Woodworth of Nassau Street-based Keller Dodds

& Woodworth to find the 6,000 square foot Princeton Gateway space,

formerly leased by Technology Management & Funding. For this

headquarters,

Medarex will be hiring 8 to 10 people, she says. It currently has

90 employees in four locations including those in Utrecht, the

Netherlands,

and at the "mouse farm" GenPharm International, in California.

Applebaum doubles as president of GenPharm, and Lisa Drakeman is CEO

of the spinoff that Medarex owns in Copenhagen, Denmark, called GenMab

A/S.

Top Of Page
Antibody Therapy

Antibody therapy was so new, 10 years ago, that Medarex hosted a

conference

to help introduce it to the scientific community. Two years ago

Medarex

added the bioengineered mice to its portfolio. A drug analyst at

Hambrecht

and Quist predicts that revenues from the mouse-produced antibody

market — including those from Medarex and a competing firm —

will total $3.1 billion by 2002.

So far Medarex has been involved in work on three dozen therapies.

Working in three areas — cancers and leukemia, autoimmune disease,

and ophthalmology — Medarex has seven monoclonal antibody products

in clinical trials. Beyond that, it has licensed its technology to

13 partners (including Amgen, Bristol-Myers Squibb, Centocor, Immunex

Corporation, and Schering AG) involved in more than 30 different

monoclonal

programs. Just announced: a 10-year license to Novartis that started

with payment of more than $3 million in stock and could go up to $50

million.

Drakeman scrimped in the early years to preserve the

company’s patent position and enhance it with the purchase of the

GenPharm mouse technology. So he is in the fortunate position —

unlike some of his peers — of being able to resist a buyout.

"When

you develop an attractive business there is always the potential that

someone will want to buy you," he admits. "But rather than

be bought by one company we would prefer to partner with them all.

"We think it is more cost effective to rent us rather than buy

us, and we will ultimately achieve much more value for our

shareholders

to have two to three dozen companies developing products from our

technology than just one," says Drakeman. "We want to give

it a chance to be used in many different places, to deliver new and

better treatments to as many different people as possible."

Top Of Page
The Hu MAb Mouse from Genpharm

How do you rent a mouse? "Our basic strategy is breed them, feed

them, and mail them," says Drakeman. "We maintain control

of the breeding and make the mice available to our partners. They

can take a license to our technology and our patents for specific

antibodies they want to make."

Typical licensing and milestone payments are in the range of $10

million.

"We don’t charge by the whisker. They get as many as they need

— they will use a handful of mice, though they really need only

one." In addition to the 6,000 foot lab in San Jose, Medarex has

colonies in New York and the Netherlands, rents a small amount of

mouse space from Rutgers, and stores embryos at other locations.

Mice are fastidious by nature but these 5,000 mice are extra clean;

they sleep on sawdust that has been sterilized by an autoclave and

eat food that has been irradiated. They are handled with forceps by

caretakers who shower before donning sterile gowns and masks.

Because mice take better care of their young when they live

communally,

each breeding cage has two females and one male. After a gestation

period of three weeks, the infants are born as big as the tip of a

little finger, hairless, pink, and blind. Weaned and hirsute at six

weeks, the mice (usually female, because they don’t fight with each

other) are eligible to travel, at eight weeks in lots of six or seven

via a courier service. "Mice travel light and travel well,"

says Drakeman.

Drakeman says that the particular technology for making antibodies

by vaccinating mice was invented by Cesar Milstein and Georges Kohler.

"The difficulty people

didn’t anticipate was that the `mouseness’ of the antibodies was going

to be a problem." The tiny bits of mouse protein contained in

the antibodies could cause an immune response that might include fatal

fever.

Top Of Page
Nils Lonberg

Whereas other scientists tried to make the mouse antibodies "look

more human," Nils Lonberg of GenPharm in San Jose worked on

perfecting

the factory, i.e. genetically engineering the mouse so it produced

human-like antibodies. "We leapfrogged that whole technology by

engineering the mice instead the antibodies," says Drakeman.

"We

replaced some of the mouse genes with human genes, so the antibodies

that the mouse makes are 100 percent human. It happens quicker,

cheaper,

and more reliably than by manipulating the antibodies."

Lonberg, an alumnus of Reed College, Class of ’79, with a PhD from

Harvard in molecular biology, met Drakeman in 1997 when Medarex bought

GenPharm, paying $65 million in stock and receiving half of that sum

back in cash.

Top Of Page
Abgenix

Only one other company claims rights to transgenic mice that produce

human antibodies, archrival Abgenix (ABGX), which raises its own

mouse,

called XenoMouse, in Fremont, California. Lonberg published his

findings

in Nature in 1994, and Abgenix filed a trade secret lawsuit, which

triggered a counter patent suit. Before Medarex bought GenPharm, the

issue was settled. Abgenix and its parent, Cell Genesis, made a

one-time

$40 million payment to GenPharm. "We felt our technology was

better

because our mouse has almost all the human genes in it," says

Kurt Leutzinger, chief financial officer of Abgenix. "But we

needed

the freedom to operate. Rather than wait for the patent situation

to clear up we each cross licensed the other’s patent."

"As a private company," explains Lonberg, "we had a

limited

amount of money and had restructured from 100 people to 7 people.

We wanted to end any cloud of uncertainty over the license." He

retains key patents to most methods of making transgenic mice that

produce human antibodies.

This is how transgenic mice do their work: Lab technicians immunize

the mouse by taking, for instance, a breast cancer cell and

vaccinating

the mouse with that cell. The technician injects the mouse with a

protein from that certain type of breast cancer. Over a period of

one to two months the mouse makes an immune response by creating

antibody-making

cells called B cells. Because the mouse has had its antibody-producing

gene replaced by a human gene, these antibodies are not likely to

cause immune reactions, so they can be administered repeatedly.

When the B cells fuse with another cell, the result is a hybridoma,

which essentially lives forever. "It will spit out antibodies

as long as you feed it," says Drakeman.

"Usually you immunize one mouse with one thing you are interested

in. That mouse will make dozens of different antibodies, and you test

them. Some will bind more tightly than others. Some will bind just

to that breast cancer and not to anything else. Some make cells more

efficient. You select from several dozen the one you like the best,

put it in a fermenter, make vats of that, and use it for the breast

cancer patient," says Drakeman. Antibodies are typically

administered

intravenously every week or a couple of weeks for several months.

Top Of Page
Bispecific Antibodies

Medarex is in a particularly good position to work with mouse-based

monoclonal antibody therapy because it pioneered in that and also

in a similar therapy, bispecific antibodies. Bispecific antibodies

can accelerate treatment. "There are times when you want to

enhance

the ability of the antibodies to access the immune system," says

Drakeman. "We `glue’ a tumor cell antibody to a cell that triggers

the immune system or blocks the immune system."

Top Of Page
Donald Drakeman

A natural leader, the six-foot two-inch Drakeman trained

as an attorney, but he is also a religious ethicist and a musician,

and his work at Medarex has drawn on each of these fields. But he

attributes his success to his upbringing: "My parents were

wonderfully

supportive of me," he says. "They made me believe that I could

accomplish

whatever I could set my mind to. They gave me the confidence to be

an entrepreneur and keep plugging ahead on treatments of life

threatening

diseases."

His father, Fred, was a plant manager for RCA in Haddonfield and then

for a gas pump manufacturer in North Carolina and the United Kingdom.

His mother, a homemaker, died last year. When the family moved from

New Jersey to North Carolina, Don was an 11th grader, but his

leadership

soon surfaced. He and two of his new friends organized Greensboro’s

first-ever youth symphony.

Don met Lisa when both were freshman, she at Mount Holyoke, he at

Dartmouth. Lisa grew up in Warren, Pennsylvania, where her father

was a forest ranger and her mother founded a jewelry store. Don played

trumpet in Dartmouth’s marching band and wrote the band’s comic

half-time

routines. Don and Lisa married three months after graduation in 1975.

He earned a law degree from Columbia in 1979 and worked on Wall Street

for Milbank Tweed, where he had his first legal experience involving

animals — a circus at Lincoln Center. When the circus caught fire,

and the pet dog for the baby elephants ran away, never to return,

the elephants refused to perform. To negotiate the contract Drakeman

had to determine the monetary value of the dog.

In 1982 he became general counsel of Essex Chemical, and in the 1980s

both he and Lisa earned their PhDs in religious history at Princeton

University. His thesis became a book detailing the separation between

church and state. (In spite of all his other duties, he teaches an

undergraduate seminar entitled "Civil Liberties" at Princeton

on an as needed basis; his course is scheduled for the spring semester

of 2000).

It was when Drakeman returned to Dartmouth for a marching band reunion

that he was introduced to the scientific powers behind Medarex,

Michael

W. Fanger, Edward D. Ball, and Paul M. Guyre. "I ended up involved

in biotech at Essex Chemical because my roommate — whom I met

in the marching band — was a professor at medical school who

became

a consultant to Essex."

With the cooperation of Nathan Dinces, Dartmouth’s director of

industrially

sponsored research, Medarex was founded as a joint venture between

Essex and Dartmouth. When Dow Chemical bought Essex in a hostile

takeover,

Drakeman and the Dartmouth researchers bought out the company.

Drakeman

left Essex in 1989 to go with Medarex full-time and moved the company

to Princeton in 1990.

In 1992 when Medarex was in the middle of selling its second round

of stock on Nasdaq, Drakeman was confronted with a very unusual

problem

— an anonymous letter to Dartmouth contesting the ownership of

the technology. Taking an extremely conservative position, Medarex

halted trading on the stock and resumed trading days later when an

investigation found the claims to be groundless.

Top Of Page
Lisa Drakeman

Also that year, Lisa began working full time, when the second of their

two daughters — now at Hun — was in first grade. (Their older

daughter now attends Princeton University.) Lisa Drakeman has played

a prominent role in the biotech community; she was appointed by

Governor

Whitman as a commissioner of Prosperity New Jersey, and she was named

Advocate of the Year by the Biotechnology Industry Organization. Lisa

is CEO of GenMab, the Danish spin-off, and on November 15 she

announced

that GenMab doubled its available financing by obtaining a loan

commitment

from the Danish Growth Fund for about $7 million.

In the biopharm field, very few husband-wife pairs can be found

juggling

jobs and family. How do they manage? "It’s easy," says Don

Drakeman. "We work all the time."

"This is such a demanding field," says Lisa, "that it

helps for both of us to be in it. We understand the pressures on each

other, and this is something we share instead of being divided by

it."

Don recalls a time when they went to a swim meet where one of their

two daughters was competing. "One of the other parents said to

us, `You two talk to each other too much to be a married couple. What

do you talk about?’ I turned and said, `Loyalty rates, milestone

payments,

licensing terms.’"

"Jobs like the ones we have, in the entrepreneurial field,

are very all encompassing. You don’t just do it 9 to 5 or even 9 to

9. We have found it to be a wonderful thing to be able to share what

is important at the office and what’s important at home at all times

of the day and night," he says. "What we do is very

fulfilling,

and to be able to work with very talented people is important and

a real blessing. Our management team is a group of really talented

people."

Top Of Page
The Pritzkers and Bay City Capital

The Drakemans’ management team has attracted some well-known

investors.

Junk bond king Michael Milken’s charity, dedicated to the cure of

prostate cancer, funded initial work on prostate cancer. A San

Francisco-based

merchant bank, Bay City Capital, put its largest single investment

— $27 million — into Medarex. The bank is 50 percent owned

by the Pritzker family, the Hyatt hotel founders known for medical

philanthropy. "When we make an investment, management is the first

thing we look at, and technology is the second," says Fred Craves,

a partner with Bay City Capital.

Medarex has a ways to go. Its mice are busy at work both inhouse and

for other companies, but its rival, Abgenix, has attracted more than

twice as much investment capital. The monoclonal antibody drug

discovery

market is hot — most of the drugs approved in the last couple

of years are based on it — but of the eight monoclonal

antibody-based

drugs available now, none are by Medarex; Medarex products are still

in the pipeline.

Still, Don Drakeman is satisfied: "We are treating a significant

number of patients in clinical trials and have seen a number of

patients

have life changing experiences as a result of our work," he says.

"Prostate patients with a life expectancy of a few months, under

our treatment, continued with dramatically lowered pain levels and

disease levels for well over a year. That is really gratifying."

The Drakemans are fond of their HuMAB mice, but they keep none as

pets. "We have four cats," he says.

Medarex (MEDX), 707 State Road, Princeton Gateway,

Suite 206, Princeton 08540. Donald L. Drakeman, president.

609-430-2880;

fax, 609-430-2850. Home page: www.medarex.com.

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