Business
Overview
We are a biopharmaceutical company focused on the discovery, development, and
commercialization of novel therapies that harness the newly-discovered, natural
mechanisms of immunological tolerance. Our goal is to utilize these mechanisms
to design therapies that reprogram the immune system in order to treat
autoimmune disease patients, organ transplant recipients, and patients suffering
from other harmful immune system responses. Our therapies are designed to
provide long-term efficacy after a short course of treatment without
compromising the immune system's ability to protect the body against invading
bacteria, viruses, and fungi.
We have established a pipeline of two monoclonal antibodies in human clinical
trials. Our TRX4 antibody is in an investigator-sponsored Phase II trial of
80 patients in Europe with new-onset Type I diabetes. The investigators have
reported to us unpublished data that at 6 months following 6 consecutive days of
therapy, a significantly higher percentage of the TRX4-treated patients
maintained a sustained or improved function of the insulin-producing, or beta,
cells of the pancreas as compared to the placebo-treated group. The
investigators have also reported to us that this clinical effect was durable 12
months after therapy. We filed an Investigational New Drug, or IND, application
that has been accepted by the U.S. Food and Drug Administration, or FDA, for
TRX4, and we intend to commence a Phase I clinical trial in mid 2004 to expand
our indications to include psoriasis. Our TRX1 antibody is being developed, in
collaboration with Genentech, to induce immunological tolerance in
transplantation, autoimmune disease, and clinical situations where the immune
system attacks a therapeutic protein. We completed a Phase Ia clinical trial of
TRX1 in the United Kingdom in July 2003. We have filed an IND that has been
accepted by the FDA, and we intend to commence a Phase Ib clinical trial of TRX1
in the United States in patients with hemophilia A in mid 2004. We also received
an additional $0.5 million research support payment from Genentech relating to
our preclinical study of TRX1 in transplantation.
Our research and development programs are designed to generate new products
based on our unique understanding of the mechanisms of immunological tolerance
and the cells that mediate tolerance. We have several novel monoclonal
antibodies being tested in animal models that have been discovered based on our
knowledge of immunological tolerance. We are also developing the TolerMab
antibody technology which modifies monoclonal antibodies so they can generate
tolerance to themselves. TolerMab antibodies are designed to allow for
repetitive dosing in immunocompetent patients with chronic diseases without
eliciting the interfering immune system response often encountered with
traditional long-term antibody therapy.
The immune system and immunological tolerance
The human immune system protects the body against infection by bacteria,
viruses, and fungi predominantly through the action of a group of blood cells
collectively called white blood cells or leukocytes. A subset of leukocytes
known as T lymphocytes, or T cells, have a surface receptor that recognizes a
specific antigen presented to them by other cells of the immune system called
antigen presenting cells, or APCs. APCs are found throughout the body and
function as sentinels guarding against invasion by pathogenic organisms. APCs
continuously
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sample their surrounding environment for antigens which they process, transport,
and present to T cells. When T cells recognize a specific antigen presented by
APCs, the APCs also instruct the T cells whether the antigen is dangerous or
harmful to the body and should be eliminated through a classical immune
response, or whether it is non-threatening and should be preserved through a
tolerogenic immune response. In a normal immune system, leukocytes eliminate
pathogens and other dangerous antigens without inflicting damage to the body's
own healthy cells and tissues.
The Classical Immune Response. A classical immune response is initiated when
APCs present antigens to T cells in the presence of alarm signals from the
body's own cells and from foreign invaders, such as molecules associated with
inflammation and cell death. This type of antigen presentation results in T cell
activation and the generation of a subtype of T cells known as T-effector cells.
These T-effector cells orchestrate the immunological processes that eliminate
the antigen and cells which contain the antigen on their surface.
The Tolerogenic Immune Response. Immunological tolerance is a normal state in
which the immune system recognizes an antigen, or tissue bearing an antigen, as
non-dangerous and thus prevents a harmful or misdirected attack. A tolerogenic
immune response begins through a similar pathway as the classical immune
response with antigen presentation by APCs and T cell activation. Without alarm
signals, or in the presence of certain tolerance-promoting molecules, antigen
presentation by APCs to T cells results in the generation of a newly discovered
subtype of T cells known as T-regulatory cells. These T-regulatory cells are
potent mediators of immunological tolerance in the body and can actively
suppress T-effector cells.
The classical immune response and the tolerogenic immune response can be
considered competing and reciprocal immune responses to a specific antigen. When
the classical immune response is dominant, T-effector cells mediate the
elimination of the antigen and cells which contain the antigen on their surface.
In contrast, when the tolerogenic immune response is dominant, T-regulatory
cells mediate the preservation of the antigen and cells which contain the
antigen on their surface.
The problems associated with immune system diseases and current treatments
A normally functioning immune system makes the appropriate determination between
permitting the classical immune response or the tolerogenic immune response to
dominate upon presentation of an antigen. In autoimmune disease, T cells are
incorrectly instructed to respond to the body's own, or self, antigens that are
non-threatening as though they are harmful or dangerous. This leads to the
generation of T-effector cells specific for self antigens which dominate over
T-regulatory cells, and the immune system harmfully attacks its own tissue. For
example, in Type I diabetes, the immune system attacks and destroys the
insulin-producing cells of the pancreas. As a result of this attack, the Type I
diabetes patient loses the ability to secrete insulin and to control glucose
levels, requiring life-long insulin injections. People with Type I diabetes are
at an increased risk of visual impairment and blindness, serious foot problems,
kidney disease, and damage to the nervous system. Other conditions associated
with adverse, harmful, or misdirected immune responses to self tissues include
psoriasis, psoriatic arthritis, rheumatoid arthritis, multiple sclerosis, and
systemic lupus erythematosis.
Historically, autoimmune diseases have been treated with drugs that suppress the
entire immune system. These immunosuppressive drugs must be administered
continuously as
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discontinuation of these drugs results in relapse of disease. These therapies do
not specifically target the cause of a disease and can have numerous harmful
effects, including rendering the patient susceptible to life-threatening
infections, malignancies, and metabolic disorders.
In organ transplant patients, the immune system often rejects the transplanted
organ instead of tolerating it as the body's own tissue. Accordingly, transplant
patients generally must receive multiple immunosuppressive drugs. This course of
therapy causes numerous side effects for transplant recipients, including an
increased risk of infection as well as an increased risk of cancer after
transplant. In order to further reduce the risk of organ rejection, tremendous
efforts are made to match potential donors with recipients. Despite this
regimen, approximately 30% of patients experience an acute rejection episode.
Therapeutic proteins are increasingly used to treat diseases, including
interferon beta for multiple sclerosis, Factor VIII for hemophilia A, and
monoclonal antibodies for various disorders. However, these proteins frequently
elicit an immune response that can reduce their efficacy or preclude repeat
dosing. Betaseron, an interferon beta product marketed by Schering AG and Berlex
Laboratories, has been reported to generate an undesirable immune response in
approximately 45% of multiple sclerosis patients. Approximately 30% to 40% of
patients with severe hemophilia A develop neutralizing antibodies to Factor VIII
replacement therapy. The use of Johnson & Johnson's approved monoclonal
antibody, Orthoclone OKT3, to treat transplant rejection has been limited by the
immune response against it and first dose reactions such as fever, chills, and
pulmonary and gastrointestinal symptoms.
Despite progress in the use of immunosuppressive drugs and therapeutic proteins,
there is still a significant, unmet clinical need for more effective and safer
therapies for patients with diseases of the immune system.
The TolerRx solution
Our solution is to harness the body's natural tolerance mechanisms to develop
therapies that reprogram the immune system and provide a long-term, durable
effect after a short course of therapy.
T cells are at the heart of most immune responses. We have focused our research
efforts on a new class of T cells, called T-regulatory cells, which can actively
suppress the generation and function of T-effector cells. T-regulatory cells are
among the most powerful mechanisms used by the body to establish and maintain
immunological tolerance. T-regulatory cells, and their interaction with other
cells of the immune system, represent a new discovery relating to the function
of a normal immune system. We believe that T-regulatory cells provide novel
mechanisms and targets for use in the development of new products to treat
patients with diseases of the immune system. Additionally, we are developing
surrogate markers and prognostic indicators of T-regulatory cell dominance and
tolerance which we believe could serve as early efficacy endpoints in clinical
development and allow us to improve our clinical outcomes.
Our therapies are designed to change the immune system's perception of
autoimmune disease related antigens and transplanted organ antigens so that
T-regulatory cells are induced, tolerogenic mechanisms become dominant, and
normal immunological defenses against invading pathogens are preserved. As these
therapies induce natural mechanisms of the
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immune system, we believe they will be safe, durable, and effective, and in some
cases may provide a cure. For example, we intend to develop therapies for
new-onset Type I diabetes that induce the immune system to suppress the
T-effector cells that cause injury to the insulin-producing cells in the
pancreas and thereby promote tolerance to these insulin-producing cells. In
addition, we intend to develop therapies that will allow transplanted organs to
be accepted without the chronic use of immunosuppressive drugs.
Our strategy
Our goal is to become the recognized leader in the discovery, development, and
commercialization of products to treat patients with diseases of the immune
system. Our strategy to achieve this goal is to:
Develop and commercialize our lead products to provide breakthrough therapies
that induce immunological tolerance. We are evaluating TRX4 in an
investigator-sponsored Phase II clinical trial of 80 patients in Europe with
new-onset Type I diabetes. We are also initiating a Phase I clinical trial of
TRX4 in patients with psoriasis. In collaboration with Genentech, we are
developing our TRX1 monoclonal antibody to induce tolerance in transplantation,
autoimmune disease, and clinical situations where the immune system attacks
therapeutic proteins or biologic drugs, such as Factor VIII for hemophilia A. We
are initiating a Phase Ib clinical trial of TRX1 in patients with hemophilia A.
We believe that our lead products will provide breakthrough therapies for immune
system diseases by establishing or re-establishing long-lasting immunological
tolerance to the disease causing antigens after only a short course of
treatment.
Generate new products for our pipeline based on our understanding of
T-regulatory cells. We have performed extensive studies comparing T-regulatory
cells to T-effector cells in order to identify genes, proteins, and signaling
pathways that are unique to or preferentially expressed by each cell population.
These genes, proteins, and pathways represent target opportunities for novel
immunological therapies. Targets that can inhibit T-effector cells and not
T-regulatory cells, or targets that activate T-regulatory cells, could lead to
tolerance promoting therapies. Conversely, therapies that block the function of
T-regulatory cells and not T-effector cells may be utilized to temporarily
disrupt tolerance mechanisms that a solid tumor or chronic viral infection tends
to induce, thereby allowing the immune system to remove the cancer cells or
virus. We have several monoclonal antibodies directed against our newly
discovered targets that are being tested in animal models, and we plan to expand
our pipeline by advancing additional products into clinical development.
Leverage collaborative partnerships. Leveraging the resources of collaborative
partners is an important element of our strategy to exploit the products and
targets being generated from our research and development programs. In these
collaborations, we seek to maintain co-development, profit sharing, and
commercialization opportunities for our products. In December 2002, we entered
into a collaboration agreement with Genentech for the development and
commercialization of TRX1. We believe that this collaboration allows us to
enhance the development of TRX1 through the funding of research and by providing
us with Genentech's expertise in manufacturing, preclinical and clinical
development, regulatory affairs, and marketing.
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Retain commercialization rights to certain products. We intend to maximize the
value of our product pipeline by retaining rights to certain products for
internal development and commercialization. We have retained all rights for the
development and commercialization of TRX4, TolerMab TRX4, TolerMab TRX3, and our
internally discovered antibodies.
Exploit knowledge of immunological tolerance to optimize clinical development.
We are utilizing our knowledge of T-regulatory cells to identify surrogate
markers of tolerance that can serve as early endpoints in our clinical trials.
With further development, we believe these surrogate markers will serve as
prognostic indicators that will allow us to assess the severity of a patient's
condition, adjust a patient's dosing regimen, and monitor a patient's progress
towards the establishment of immunological tolerance. We expect that this
approach will improve our clinical outcomes and accelerate the development of
our drugs.
Commercialize the TolerMab antibody technology internally and through partners.
We intend to develop our TolerMab antibody technology to enable long-term,
repeated dosing of antibodies in immunocompetent patients with chronic diseases.
After further development, we plan to enter into agreements for TolerMab
versions of partners' antibodies in exchange for license fees, milestone
payments, and royalties. In addition, we intend to use the TolerMab technology
to develop products for our internal pipeline, such as TolerMab TRX3 and
TolerMab TRX4.
Drug development programs
We currently have two monoclonal antibodies in human clinical trials as follows:
Development and
Product Indication Development stage commercialization rights
TRX4 Type I Diabetes Phase II(1) TolerRx
Psoriasis Phase I
TRX1 Hemophilia A Phase I Genentech/TolerRx
Transplantation Preclinical
Autoimmune Disease Preclinical
(1) Investigator-sponsored trial in Europe.
TRX4
TRX4 is a humanized monoclonal antibody that binds to a receptor found on all T
cells called CD3, which is involved in normal T cell signaling. TRX4 is designed
to block the function of T-effector cells that attack the body and cause
autoimmune disease. Because T-effector cells and T-regulatory cells function
differently, TRX4 is expected to have a favorable effect on T-regulatory cells,
thereby promoting a state of immunological tolerance. We are developing TRX4 to
treat patients with Type I diabetes and psoriasis.
CD3 is a well validated target for monoclonal antibody therapeutics. The first
monoclonal antibody approved by the FDA was the murine anti-CD3 antibody,
Orthoclone OKT3, by Johnson & Johnson. OKT3 is used to deplete T cells in order
to reverse organ transplant rejection. However, the use of OKT3 has been limited
due to early adverse effects, including fevers, chills, and pulmonary and
gastrointestinal symptoms. Additionally, the clinical utility of OKT3 has been
limited by the immune response that the patient generates against it. TRX4 is
designed to reduce these side effects and adverse responses.
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Type I diabetes
TRX4 is currently being studied in an investigator-sponsored Phase II clinical
trial in Europe in patients with new-onset Type I diabetes. Patients enrolled in
the trial must have had no more than 4 weeks of insulin therapy prior to the
start of treatment and have the ability to produce some insulin. The patients
were randomized such that 40 patients were treated with TRX4 and 40 patients
were given a placebo. All patients were treated with insulin as medically
necessary. As of March 2003, the last patient enrolled had completed treatment
in this randomized, double-blind, placebo-controlled trial. The trial is being
conducted by the Juvenile Diabetes Research Foundation Center for Beta Cell
Therapy in Europe, and with financial support from the Juvenile Diabetes
Research Foundation. It involves the participation of the Belgium Diabetes
Registry, the universities in Brussels (VUB-ULB), Louvain (KUL), Antwerp (UIA),
the Schwabing Hospital Munich, and Hospital Necker in Paris.
The investigators performed an efficacy and safety analysis at 6 months and 12
months following 6 consecutive days of therapy with TRX4. The investigators have
reported to us unpublished data that at 6 months after therapy, a significantly
higher percentage of the TRX4-treated patients maintained a sustained or
improved function of the beta cells of the pancreas as compared to the
placebo-treated group. The investigators have also reported to us that this
clinical effect was durable 12 months after therapy. The investigators intend to
publish these data in a major medical or scientific journal. We intend to
perform an independent audit and analysis of these data and to conduct further
clinical trials in patients with new-onset Type I diabetes after discussions
with the FDA in 2005.
According to the Juvenile Diabetes Research Foundation, approximately one
million people in the United States have Type I diabetes and 30,000 new patients
are diagnosed each year, including over 13,000 children. In Type I diabetes, the
pancreas produces little or no insulin as a result of the immune system
attacking and destroying the beta cells in the pancreas. As a result, Type I
diabetes patients require frequent administration of insulin therapy each day to
control their blood sugar levels. Maintaining the function of the beta cells
allows a Type I diabetes patient to continue to produce some natural insulin and
diminishes the patient's need to administer insulin therapy. Published studies
have demonstrated that the preservation of beta cell function in patients with
Type I diabetes results in easier and better control of blood sugar levels,
including a lower risk for hypoglycemia, or low blood sugar levels, one of the
major complications of intensive insulin therapy. These studies have also
indicated that retention of beta cell function and preservation of natural
insulin production is associated with a reduced incidence of diabetes-related
chronic complications, including serious eye disease, nervous system, kidney,
and vascular disorders.
TRX4 has been designed to treat patients with Type I diabetes by blocking
T-effector cells from attacking beta cells. In addition to the data with TRX4
from the investigator-sponsored trial in Europe, there are published studies
which also indicate that blocking these T cells early in the disease process
with anti-CD3 therapy will decrease injury to the beta cells and preserve the
normal function of these cells. In one of those published studies, 75% of
treated patients showed improvement or lack of disease progression one year
after a single therapeutic course. We believe that TRX4 therapy in new-onset
Type I diabetes has the potential to have a durable therapeutic effect, a
characteristic that no approved treatment regime can claim in this indication.
We expect our therapy to provide efficacy and an improved quality of life for
these
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patients by preserving beta cell function, and thereby decreasing their
dependence on insulin injections and preserving normal glucose control.
Psoriasis
We filed an IND in the United States to expand our TRX4 clinical indications by
commencing a Phase I clinical trial of TRX4 in patients with psoriasis. In the
Phase I psoriasis study, we will evaluate the safety, pharmacokinetic and
pharmacodynamic profile of TRX4 in a single-dose, dose escalating study. The IND
was accepted by the FDA.
Psoriasis is an immune-mediated, genetic disease of the skin that affects about
two percent of the U.S. population. The most severe and disabling cases of
psoriasis require systemic medications such as methotrexate and cyclosporine,
which have severe side effects including decreased kidney function, high blood
pressure, and high cholesterol. Several new treatments for psoriasis include
biologics, such as Amevive, Raptiva, and Enbrel, which must be injected or
infused into the body rather than taken orally.
Published studies have indicated that anti-CD3 therapy has the potential for
therapeutic benefit in psoriasis, including patients with psoriatic arthritis.
In one study, anti-CD3 therapy resulted in a statistically significant reduction
in the number of tender and swollen joints 30 days and 90 days after therapy.
The anti-CD3 therapy also resulted in an improvement in the accompanying skin
disease.
Preclinical and clinical safety analysis
In a preclinical toxicology study in chimpanzees, two dose levels of TRX4 were
evaluated. One group of animals received a low dose that was approximately the
same as the highest anticipated human dose and approximately the same as the
total dose administered in the European Type I diabetes trial. The high dose
group animals received a dose that was five times greater than the highest
anticipated human dose. In the high dose group, TRX4 levels in the blood over
time, known as exposure, was estimated to be over 40-fold higher than the
exposure that the patients experienced in the European Type I diabetes trial. We
believe that this increased exposure and differences in how chimpanzee cells
interact with TRX4 compared to how human cells interact with TRX4 caused an
exaggerated pharmacological response. This response led to reactivation of a
chimpanzee-specific virus similar to the Epstein-Barr virus, or EBV-like virus,
which caused lymphoproliferative disease and ultimately the death of the three
animals in the high dose group. The chimpanzees in the low dose group
experienced an estimated 4-fold greater exposure to TRX4 compared with the
patients in the European Type I diabetes trial. These animals showed temporary
and expected immunological changes during TRX4 therapy, including some
reactivation of the EBV- like virus, and recovered. As a result, we and the FDA
have agreed to the laboratory and clinical tests that will be used in our
clinical trials with TRX4 in order to monitor and ensure patient safety during
dose escalation.
In the European Type I diabetes study, the majority of patients experienced mild
to moderate flu-like symptoms related to initial doses of TRX4 that were
markedly diminished as compared to the investigators' historical experience with
OKT3. These reactions decreased or diminished with continued dosing of TRX4. At
approximately two to three weeks after treatment with TRX4, many patients
developed an increased level of EBV detectable in their circulation, some of
which were coincident with signs and symptoms suggestive of a viral infection,
such as sore
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throat, fever, enlarged lymph nodes, and rash. One individual was hospitalized
twice for sore throat, fever, and enlarged lymph nodes and was treated with
antibiotics and steroids. However, the signs, symptoms, and EBV increases were
transient, resolved in all subjects likely due to an effective anti-viral immune
response, and did not recur in any individual, including the one who required
hospitalization.
TolerMab TRX4
We are developing a TolerMab form of TRX4 as a potential second generation
product. TolerMab TRX4 is in preclinical development. We own all rights for the
development and commercialization of TRX4 and TolerMab TRX4.
TRX1
In December 2002, we entered into a collaboration agreement with Genentech for
the development and commercialization of products targeting the CD4 molecule,
including TRX1. TRX1 is a humanized monoclonal antibody that binds to the CD4
receptor found on both T-effector cells and T-regulatory cells. Because
T-effector cells utilize different signaling pathways upon antigen presentation
as compared to T-regulatory cells, some of which are associated with the CD4
receptor, TRX1 is expected to block the activation and function of T-effector
cells and to favor the dominance of T-regulatory cells. TRX1 is being developed
to induce immunological tolerance in transplantation, autoimmune diseases, and
in settings requiring the chronic administration of therapeutic proteins.
In July 2003, we completed a single-dose, placebo-controlled, double-blind Phase
I trial in the United Kingdom with TRX1. The trial evaluated doses of 1, 5 and
10 mg/kg of TRX1 in normal healthy volunteers. The endpoints of the trial were
designed to assess the safety and pharmacokinetic parameters of TRX1. In the
study, TRX1 appeared to be well tolerated, did not deplete T cells, and first
dose side effects, such as fevers, chills, and hypotension were not observed. At
the highest dosing group of 10 mg/kg, a rash was observed in two of three
TRX1-treated volunteers at 17 and 20 days after dosing, which required
symptomatic therapy to resolve the rash. Rash was not observed at the 1 and 5
mg/kg dosing groups. Based upon the pharmacokinetic profile of TRX1, we believe
that the effective tolerizing dose of TRX1 will be lower than 10 mg/kg, thereby
reducing the risk of rash.
In nonhuman primates, we have demonstrated that a short course of TRX1 can
induce a long-term, antigen-specific tolerance to a normally immunogenic
biological protein drug without compromising normal immune function. We believe
that TRX1 could be applicable in situations where administration of a biologic
protein therapy induces an interfering immune response, such as Factor VIII
therapy in hemophilia A, interferon beta therapy in multiple sclerosis, enzyme
replacement therapy, and therapies involving repeated administration of
antibodies. For example, approximately 30% to 40% of patients with severe
hemophilia A develop neutralizing antibodies to Factor VIII, requiring clinical
immune tolerance induction strategies involving increased Factor VIII dosing and
expenses of approximately $1 million per patient during one year of treatment.
In collaboration with Genentech, we are evaluating the potential use of TRX1 to
induce tolerance to therapeutic proteins or biologic drugs. We filed an IND to
commence a Phase Ib clinical trial in patients with hemophilia A. In the Phase
Ib study, we will evaluate the safety, pharmacokinetics and pharmacodynamics of
TRX1 in patients
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who have inhibitors to their Factor VIII replacement therapy and are failing,
have failed, or are ineligible for Factor VIII immune tolerance induction
therapy in a multi-dose, dose escalating study. The IND was accepted by the FDA.
In addition, we are evaluating TRX1 in nonhuman primates and Genentech is
evaluating TRX1 in rodent models as a tolerance induction therapy in
transplantation. The objective is to prevent transplant rejection and decrease
or eliminate the need for chronic, immunosuppressive, maintenance therapy. From
July 2001 to June 2002, approximately 25,000 patients in the U.S. received an
organ transplant, approximately 80,000 people were on a waiting list to receive
a transplant, and approximately 6,300 people died while waiting for a
transplant. Our preclinical studies are examining the parameters required for
successful induction of transplantation tolerance and are expected to provide
the foundation for the design of human clinical trials using TRX1 in
transplantation. We received a $0.5 million research support payment from
Genentech in November 2003 related to our nonhuman primate preclinical study in
kidney transplantation.
As part of our collaboration with Genentech, Genentech is evaluating TRX1 in
preclinical models as a primary therapy for patients with autoimmune diseases.
The objective will be to induce tolerance to autoimmune disease causing
antigens.
TRX2
TRX2 is a humanized monoclonal antibody that binds to the CD8 receptor found on
a subset of T cells. TRX2 is currently in preclinical development in a renal
transplantation study in nonhuman primates as combination therapy with TRX1. We
believe that TRX2 could be synergistic with TRX1 for the induction of
immunological tolerance in organ transplantation due to the role that T cells
bearing the CD8 receptor have in the early rejection of transplants. TRX2 is
designed to deplete these T cells at the time of transplant so that they do not
cause rejection of the transplant before immunological tolerance can be
established by TRX1. In addition to the current agreement with Genentech that
covers uses of TRX1 in combination therapy with other therapeutics including
TRX2, we have also granted Genentech a right of first negotiation for TRX2 and
any rights we may own or control that solely relate to anti-CD8 antibodies if we
decide to seek a partner for such products.
TolerMab antibody technology
One of the problems associated with monoclonal antibody drugs is that the
patient's immune system may incorrectly respond to the antibody as dangerous and
eliminate it from the body, thereby decreasing its effectiveness. While
humanized and fully human antibodies generate less of an immune response than
mouse or rat antibodies, published data regarding certain antibodies currently
marketed or under development indicate that the body will still generate an
immune response to these antibodies. We believe that this immunogenicity will
continue to be recognized as a significant clinical issue. For example, the
fully human antibody Humira, marketed by Abbott Laboratories, has been reported
to elicit a 12% rate of immunogenicity in rheumatoid arthritis trials, and
previously, it has been reported that the humanized antibody MEDI-507 from
MedImmune had a 50% rate of immunogenicity in psoriasis patients.
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Using our TolerMab technology, we intend to modify monoclonal antibodies so that
immunological tolerance is induced to the antibodies while maintaining
therapeutic benefit. We have two TolerMab antibodies in preclinical development,
TolerMab TRX3 and TolerMab TRX4. The TolerMab technology is expected to provide
the following benefits:
effective, long-term, repeated dosing for the treatment of immunocompetent
patients with chronic disease;
lower first dose side effects than traditional antibodies that deplete their
target cells; and
no or lower rates of interfering immune responses.
Our proprietary TolerMab technology involves attaching two small amino acid
sequences, or modifiers, to the antibody. Each modifier can move in and out of
an antibody binding site. When a modifier blocks a binding site, the antibody is
hindered from binding to target sites. However, binding to the target and
antibody function occur when a modifier moves out of the binding site. The
result is that the binding rate of the antibody to the target is decreased,
resulting in an excess of free, non-cell bound antibody rather than cell bound
antibody immediately after dosing. The immune system recognizes the high
concentration of the unbound antibody as non-dangerous and triggers the
induction of immunological tolerance to TolerMab antibodies. We believe that
TolerMab antibodies bind to their target and will be effective in the body after
this tolerance induction is established. TolerMab antibodies are designed to be
used repeatedly without the interference of a neutralizing immune response.
TolerMab TRX3
TolerMab TRX3 is a monoclonal antibody that binds to the CD2 receptor found on T
cells and other subsets of lymphocytes. TolerMab TRX3 is in preclinical
development for treatment of autoimmune diseases. Activated T cells have
elevated levels of CD2 on their surface and have been shown to play an important
role in autoimmune and inflammatory diseases such as psoriasis. Inhibiting the
function of activated T cells by targeting the CD2 antigen is expected to have
therapeutic benefit. Biogen Idec's Amevive, which was recently approved for the
treatment of patients with psoriasis, is a fusion protein that is directed at
the CD2 antigen.
TolerMab TRX3 has been designed to have similar therapeutic benefits as other
CD2-related therapies but without immunogenicity. In a recent clinical trial of
psoriasis patients, MedImmune reported that as many as 50% of patients generated
an undesirable immune response to its humanized anti-CD2 monoclonal antibody
MEDI-507. We own all rights for the development and commercialization of
TolerMab TRX3.
Research and discovery
In our research and discovery programs, we have discovered, isolated, and
characterized cells that mediate immunological tolerance. We have developed a
unique understanding of how the
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immune system operates, both normally and in disease states. Our research and
development efforts have produced and will continue to develop:
a database consisting of over 100 potential targets, including components of
signaling pathways, co-stimulatory molecules, cell surface molecules, and
cytokines that selectively block or enhance the function of T-effector cells and
T-regulatory cells;
screening assays, or tests, for the identification of new tolerance promoting
therapies;
animal models that allow for a direct validation of the potential targets or
analysis of the efficacy of tolerance promoting therapies;
in vivo surrogate markers and prognostic indicators for tolerance to rapidly
identify the most appropriate dosing strategies; and
novel products directed to our targets.
We have research and discovery programs to identify novel products involved in
immunological tolerance mediated by T-regulatory cells. We believe that products
directed to targets found to be associated with T-effector cells rather than
T-regulatory cells, or that activate T-regulatory cells, could become
tolerance-inducing therapies to treat patients with immune system diseases. We
also believe that targets on certain subsets of dendritic cells could lead to
tolerance promoting therapies by preventing the development and function of
mature dendritic cells that present antigens to T cells in a manner that induces
a classical immune response. These therapies could enhance the activity of more
immature dendritic cells that present antigens to T cells in a manner that
favors tolerogenic immune responses.
The majority of our research to date has been focused on the therapeutic
induction of immunological tolerance. However, in some diseases, the immune
system fails to identify and eliminate a danger to the body. Certain tumors and
viruses, such as hepatitis C and HIV, evade detection and removal by the immune
system. These tumors and viruses appear to have defense mechanisms that enable
them to induce T-regulatory cells and a tolerogenic immune response instead of a
classical immune response. In these diseases, our goal is to discover therapies
that block the function of T-regulatory cells rather than T-effector cells in
order to disrupt the specific tolerance mechanisms that have been generated and
unleash the body's immune system to eliminate the tumor or virus.
Overall, we have identified and are validating potentially relevant targets and
have filed several patent applications to protect these discoveries. We have
generated multiple monoclonal antibodies and fusion proteins against many of our
cell surface targets. We also intend to develop small molecule therapeutics to
selected intracellular targets. We will use our development experience to
advance these new drug candidates, and we expect to move at least one product
into IND-enabling studies by the end of 2004. Three of these new monoclonal
antibody products are:
ILT3 Antibody
ILT3 is an inhibitory receptor expressed by dendritic cells and a subset of
white blood cells called monocytes. Our gene expression analysis revealed ILT3
expression to be increased on tolerogenic immature dendritic cells that lead to
the initiation of a tolerogenic immune response as compared to mature dendritic
cells that favor the classical immune response. Our
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ILT3 antibody is expected to trigger inhibitory signaling, suppress immunogenic
antigen presentation, and promote the development of tolerogenic antigen
presentation to treat autoimmune disease or prevent transplant rejection.
CD160 Antibody
CD160 is a surface receptor molecule found on a small subset of T-effector cells
that have cell killing activity. Our anti-CD160 monoclonal antibody is designed
for use as an anti-inflammatory or tolerance-promoting drug to eliminate
self-reactive T-effector cells without harming T-regulatory cells.
GITR Antibody
GITR is a surface receptor molecule that has been shown to be involved in
inhibiting the suppressive activity of T-regulatory cells and extending the
survival of T-effector cells. We believe that stimulation of GITR with a
monoclonal antibody will break T-regulatory cell mediated tolerogenic immune
responses to tumor and viral antigens allowing the development of anti-tumor and
anti-viral T-effector cell classical immune responses. Our GITR antibody is
expected to unleash the immune system and permit the T-effector cells to
eliminate cancer cells or viruses.
Collaboration with Genentech
In December 2002, we entered into a collaboration agreement with Genentech for
the development and commercialization of products that target the CD4 molecule,
including our TRX1 monoclonal antibody. To date, we have received a total of
$8.5 million from Genentech in the form of a license fee, an equity investment,
a milestone payment, and funded research and development. Subject to the
achievement of all development and regulatory approval milestones regarding
multiple indications for products that target the CD4 molecule, we may receive
up to approximately $80 million of additional funding from Genentech. If TRX1
receives marketing approval, Genentech would be responsible for
commercialization and would record all revenue related to sales of TRX1, and we
would receive royalty payments on net sales of TRX1. In lieu of receiving
royalties on sales of TRX1 in the United States, we have the option to
participate in a cost and profit sharing relationship and to support the
commercialization of TRX1 through our own medical science liaisons who would
educate the medical profession about our product, subject to Genentech's
approval. We have also granted Genentech a right of first negotiation for
products targeting the CD8 molecule on T cells, including our TRX2 monoclonal
antibody. Genentech has the right to terminate our collaboration agreement at
any time, with or without cause, 90 days after providing written notice.
Otherwise, the agreement terminates upon the later of (a) the date when
Genentech has made all of the royalty payments it is obligated to make under
certain sections of the agreement and (b) if (and only if) we have exercised and
continue to participate in the profit sharing option in the United States, the
date when Genentech terminates sales of the products in the United States. There
are also instances where a party may terminate the agreement for material
breach, insolvency, or bankruptcy of the other party. Our collaboration with
Genentech, including the receipt of any payments from Genentech, is subject to
further risks set forth in "Risk factors" contained elsewhere in this
prospectus, in particular, the risks relating to our collaboration with
Genentech appearing on pages 8 and 9.
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Patent and proprietary rights
We will be able to protect our proprietary rights from unauthorized use by third
parties only to the extent that our proprietary rights are covered by valid and
enforceable patents or trademarks or are effectively maintained as trade
secrets. Accordingly, patent, trademark, and other proprietary rights are an
essential element of our business.
To date, we have licenses to approximately 95 issued U.S. and foreign patents.
Of these licensed patents, five have been granted in the United States, and they
expire between 2013 and 2017. In addition, we own or have licenses to
approximately 40 pending U.S. and foreign patent applications. Specifically, we
have entered into a license agreement with Cambridge University Technical
Services Limited (CUTS) with respect to our TRX1 and TRX2 products. The license
is in the field of prevention, treatment, and diagnosis of human diseases and is
exclusive with respect to the TRX1 and TRX2 antibodies, except for certain
non-commercial rights retained by the licensor. We are obligated to pay
royalties in each country for the longer of ten years from the date of the
license or expiration of the licensed patents. Upon expiration of the royalty
term, we retain a non-exclusive royalty free license to the unpatented
technology. The license may be terminated by the licensor for material breach
including but not limited to insolvency or bankruptcy, failure to make payments
when due, and failure to exert reasonable commercial efforts to research,
develop, and commercialize product under the license. We are obligated to pay
patent costs and have the right to enforce licensed patents.
We have also entered into a license agreement with both the Chancellor Masters
and Scholars of the University of Oxford and ISIS Innovation Limited with
respect to our TRX1 and TRX2 products. The license is exclusive with respect to
the TRX1 and TRX2 antibodies, except for certain non-commercial rights retained
by the licensor. We are obligated to pay royalties in each country for the
longer of ten years from the date of commercialization or expiration of the
applicable patents in a country. Upon expiration of such royalty term, we retain
a royalty free license. The license may be terminated by the licensor for
certain uncured material breaches including, but not limited to failure to make
payments when due, failure to exert reasonable commercial efforts to develop and
commercialize the licensed product, and bankruptcy. We are obligated to pay
patent costs and have the right to enforce licensed patents.
We have also been granted a license from CUTS with respect to our TRX3 product.
The license is an exclusive license in the field of treating and preventing
human disease, except for certain non-commercial rights retained by the
licensor. We are obligated to pay royalties in each country for the longer of
ten years from the date of the license agreement or the date of expiration of
the licensed patents in a country. Upon expiration of the royalty term, we
retain a non-exclusive license to the licensed unpatented technology. The
license may be terminated by the licensor for an uncured material breach
including but not limited to failure to make a payment when due, insolvency or
bankruptcy, and failure to exert reasonable commercial efforts to research,
develop, and commercialize product under the license. We are obligated to pay
patent costs and have the right to enforce licensed patents.
We have a license from BTG International Limited (BTG) with respect to our TRX4
product. The license is exclusive as to patents and non-exclusive as to
technology, in each case subject to non-commercial rights retained by the
inventors. We are obligated to pay royalties on patented products and to also
pay minimum royalties after launch of product. BTG is responsible for
51
paying patent costs and we have the right to enforce the patents at our expense.
The license may be terminated by BTG for uncured material breach including but
not limited failure to make payments when due, failure to exert reasonable
efforts to develop product under a development plan, and insolvency and
bankruptcy.
As our research and development efforts yield novel targets, small molecule drug
candidates, and therapeutic antibodies, we intend to apply for broad composition
of matter patents covering such targets, drug candidates, and antibodies. In
addition, we intend to file patent applications claiming new methods of treating
diseases for our identified drug candidates and antibodies. As we develop new
technologies or novel improvements in our existing technologies, we will file
for both composition of matter and method of use patents, as appropriate.
We are party to various agreements that give us rights to use technologies
developed in collaborative research and development programs. These
collaborations are intended to further our understanding of the mechanisms of
tolerance induction and maintenance. We believe that this knowledge will lead to
the discovery of novel targets, small molecule drug candidates, and therapeutic
antibodies. We, either individually or jointly with our collaborators, in
accordance with the terms of our agreements, may seek patent protection for
these discoveries.
As a general matter, obtaining patents in the biopharmaceutical field is highly
uncertain and involves complex legal, scientific, and factual matters. Obtaining
a patent in the United States in the biopharmaceutical field can be expensive
and can require several years. Failure to receive patents under the applications
that we have filed, or that others have filed on our behalf, and may file from
time to time could be harmful to us. Our patent filings in the United States may
be subject to interference or re-examination proceedings. The defense and
prosecution of interference and re-examination proceedings and related legal and
administrative proceedings in the United States involve complex legal,
scientific, and factual questions.
We also file patent applications outside of the United States. The laws of some
foreign countries may not protect our proprietary rights to the same extent as
do the laws of the United States. Third parties may attempt to oppose the
issuance of our patents in foreign countries by initiating opposition
proceedings. Additionally, if an opposition proceeding is initiated against any
of our patent filings in a foreign country, that proceeding could have an
adverse effect on the corresponding patents that are issued or pending in the
United States. If we become involved in any interference, re-examination,
opposition, or litigation proceedings in the United States or foreign countries
regarding patent or other proprietary rights, those proceedings may result in
substantial cost to us, regardless of the outcome. In addition, these
proceedings may have a material adverse effect on our ability to develop,
manufacture, market, or license our technologies or products, or to maintain or
form strategic alliances.
Although we plan to aggressively prosecute our patent applications and defend
our patents against third-party infringement, our patent applications may not
result in the issuance of patents or, if issued, our patents may be challenged,
invalidated, or circumvented. Moreover, our patents, to the extent they are or
will be issued, may not provide us protection against competitors with other
technologies. Our technologies and potential products may conflict with patents
that have been or may be granted to competitors, universities, or others. In
particular, patent applications or patents for innovative and broadly applicable
technologies,
52
such as our TolerMab antibody platform, are sometimes challenged by third
parties as obvious or as obvious extensions of technologies previously developed
by those third parties.
As the biopharmaceutical industry expands and more patents are issued, the risk
increases that our technologies and potential products may give rise to claims
that they infringe the patents of others. Third parties claiming infringement of
their proprietary rights could bring legal actions against us claiming damages
and seeking to enjoin our commercialization of a product or our use of a
technology. For example, we are aware of a third party patent application that
would cover the use of a non-mitogenic anti-CD3 antibody for the treatment of
autoimmune disease, as well as an issued third party patent covering the ILT3
molecule and the use of antibodies directed at that target. If any actions based
on these claims are successful, in addition to any potential liability for
damages, we could be required to obtain a license in order to continue to use a
technology or to manufacture or market a product, or could be required to cease
using those products or technologies. Any claim, with or without merit, could
result in costly litigation and divert the efforts and attention of our
scientific and management personnel. We may not prevail in any action, and any
license required under any patent may not be made available on acceptable terms,
if at all.
In addition to patent protection, we may rely on trade secrets, proprietary
know-how, and continuing technological advances to develop and maintain our
competitive position. To maintain the confidentiality of our trade secrets and
proprietary information, all of our employees are required to enter into and
adhere to a confidentiality and invention assignment agreement as a condition of
employment. Additionally, these agreements require that our employees do not
bring to us, or use without proper authorization, any third-party proprietary
technology. We also require all of our consultants and collaborators that have
access to proprietary property to execute confidentiality and invention
assignment agreements in our favor before beginning their relationship with us.
While such arrangements are intended to enable us to better control the use and
disclosure of our proprietary property and provide for our ownership of
proprietary technology developed on our behalf, they may not provide us with
meaningful protection for such property and technology in the event of
unauthorized use or disclosure.
Manufacturing and supply
We have relied upon Biovest International, Laureate Pharma, and the Therapeutic
Antibody Centre of the University of Oxford to produce material for preclinical
and clinical testing purposes. We have received sufficient material from these
third parties to meet our current needs. Under our collaboration agreement with
Genentech, we expect that Genentech will manufacture the TRX1 monoclonal
antibody for clinical and commercial use.
Government regulation
U.S. regulatory requirements
The U.S. Food and Drug Administration, or FDA, and comparable regulatory
agencies in foreign countries regulate and impose substantial requirements upon
the research, development, preclinical and clinical testing, labeling,
manufacture, quality control, storage, approval, advertising, promotion,
marketing, distribution, and export of pharmaceutical products,
53
including biologics, as well as significant reporting and record-keeping
obligations. State governments may also impose obligations in these areas.
In the United States, pharmaceutical products are regulated by the FDA under the
federal Food, Drug, and Cosmetics Act, or FDCA, and other laws, including in the
case of biologics, the Public Health Service Act. We believe, but cannot be
certain, that our products will be regulated as biologics and drugs by the FDA.
The process required by the FDA before biologics or drugs may be marketed in the
United States generally involves the following:
preclinical laboratory and animal tests performed under the FDA's Good
Laboratory Practices regulations to assess potential safety and effectiveness;
submission and approval of an IND which must become effective before clinical
trials may begin in the United States;
obtaining approval of Institutional Review Boards to protect the welfare and
rights of human subjects in clinical trials;
adequate and well-controlled human clinical trials to establish the safety
and efficacy of the product in the product's intended use;
development of manufacturing processes which conform to FDA-mandated current
Good Manufacturing Practices, or cGMPs;
laboratory evaluation of the product's formulation and stability; and
FDA review and approval of either a Biologics License Application, or BLA, or
a New Drug Application, or NDA, prior to any commercial sale or shipment of a
product.
The testing and approval process requires substantial time, effort, and
financial resources, and we cannot be certain that any approval will be granted
on a timely basis, if at all.
The results of the preclinical tests, together with initial specified
manufacturing information, the proposed clinical trial protocol, and information
about the participating investigators, are submitted to the FDA as part of an
IND, which must be approved before we may begin human clinical trials.
Additionally, an independent Institutional Review Board at each medical site
proposing to conduct the clinical trials must review and approve each study
protocol and oversee conduct of the trial. An IND becomes effective 30 days
after receipt by the FDA, unless the FDA, within the 30-day period, raises
concerns or questions about the conduct of the trials as outlined in the IND and
imposes a clinical hold. If the FDA imposes a clinical hold, the IND sponsor
must resolve the FDA's concerns before clinical trials can begin. Preclinical
tests and studies can take several years to complete, and there is no guarantee
that an IND we submit based on such tests and studies will become effective
within any specific time period, if at all.
Human clinical trials are typically conducted in three sequential phases that
may overlap:
Phase I: The drug is initially introduced into healthy human subjects or
patients and tested for safety and dosage tolerance. Absorption, metabolism,
distribution, and excretion testing is generally performed at this stage.
Phase II: The drug is studied in controlled, exploratory therapeutic trials
in a limited number of subjects with the disease or medical condition for which
the new drug is intended to be
54
used in order to identify possible adverse effects and safety risks, to
determine the preliminary or potential efficacy of the product for specific
targeted diseases or medical conditions, and to determine dosage tolerance and
the optimal effective dose.
Phase III: When Phase II studies demonstrate that a specific dosage range of
the drug is likely to be effective and the drug has an acceptable safety
profile, controlled, large- scale therapeutic Phase III trials are undertaken at
multiple study sites to demonstrate clinical efficacy and to further test for
safety in an expanded patient population.
We cannot be certain that we will successfully complete Phase I, Phase II, or
Phase III testing of our products within any specific time period, if at all.
Furthermore, the FDA, the Institutional Review Board or we may suspend or
terminate clinical trials at any time on various grounds, including a finding
that the subjects or patients are being exposed to an unacceptable health risk.
Results of preclinical studies and clinical trials, as well as detailed
information about the manufacturing process, quality control methods, and
product composition, among other things, are submitted to the FDA as part of a
BLA or NDA seeking approval to market and commercially distribute the product on
the basis of a determination that the product is safe and effective for its
intended use. BLAs are used for products that are regulated as biologics, such
as antibodies, and NDAs are used for products that are regulated as drugs, such
as synthetic chemicals. Before approving a BLA or NDA, the FDA will inspect the
facilities at which the product is manufactured and will not approve the product
unless cGMP compliance is satisfactory. If applicable regulatory criteria are
not satisfied, the FDA may deny the BLA or NDA or require additional testing or
information. As a condition of approval, the FDA also may require post-marketing
testing or surveillance to monitor the product's safety or efficacy. Even after
a BLA or NDA is approved, the FDA may impose additional obligations or
restrictions (such as labeling changes), or even suspend or withdraw product
approval on the basis of data that arise after the product reaches the market,
or if compliance with regulatory standards is not maintained. We cannot be
certain that any BLA or NDA we submit will be approved by the FDA on a timely
basis, if at all. Also, any such approval may limit the indicated uses for which
the product may be marketed. Any refusal to approve, delay in approval,
suspension or withdrawal of approval, or restriction on indicated uses could
have a material adverse impact on our business.
Each BLA or NDA must be accompanied by a user fee, pursuant to the requirements
of the Prescription Drug User Fee Act, or PDUFA, and its amendments. According
to the FDA's fee schedule, effective on October 1, 2003 for the fiscal
year 2004, the user fee for an application requiring clinical data, such as a
BLA or NDA, is $573,500. The FDA adjusts the PDUFA user fees on an annual basis.
PDUFA also imposes an annual product fee for prescription drugs and biologics
($36,080 for the fiscal year 2004), and an annual establishment fee ($226,800)
on facilities used to manufacture prescription drugs and biologics. We are not
at the stage of development with our products where we are subject to these
fees, but they are significant expenditures that will be incurred in the future
and must be paid at the time of application submission to FDA.
Satisfaction of FDA requirements typically takes several years. The actual time
required varies substantially, based upon the type, complexity, and novelty of
the pharmaceutical product, among other things. Government regulation imposes
costly and time-consuming requirements
55
and restrictions throughout the product life cycle and may delay product
marketing for a considerable period of time, limit product marketing, or prevent
marketing altogether. Success in preclinical or early stage clinical trials does
not assure success in later stage clinical trials. Data obtained from
preclinical and clinical activities is not always conclusive and may be
susceptible to varying interpretations that could delay, limit, or prevent
marketing approval. Even if a product receives marketing approval, the approval
is limited to specific clinical indications. Further, even after marketing
approval is obtained, the discovery of previously unknown problems with a
product may result in restrictions on the product or even complete withdrawal of
the product from the market.
After product approval, there are continuing significant regulatory requirements
imposed by the FDA, including record-keeping requirements, obligations to report
adverse experiences, and restrictions on advertising and promotional activities.
Quality control and manufacturing procedures must continue to conform to cGMPs,
and the FDA periodically inspects facilities to assess cGMP compliance.
Additionally, post-approval changes in manufacturing processes or facilities,
product labeling, or other areas require FDA review and approval. Failure to
comply with FDA regulatory requirements may result in enforcement action by the
FDA, including product recalls, suspension or revocation of product approval,
seizure of product to prevent distribution, impositions of injunctions
prohibiting product manufacture or distribution, and civil and criminal
penalties. Maintaining compliance is costly and time-consuming. Nonetheless, we
cannot be certain that we, or our present or future suppliers or third-party
manufacturers, will be able to comply with all FDA regulatory requirements, and
potential consequences of noncompliance could have a material adverse impact on
our business.
FDA's policies may change, and additional government regulations may be enacted
that could delay, limit, or prevent regulatory approval of our products or
affect our ability to manufacture, market, or distribute our products after
approval. Moreover, increased attention to the containment of healthcare costs
in the United States and in foreign markets could result in new government
regulations that could have a material adverse effect on our business. Our
failure to obtain coverage, an adequate level of reimbursement, or acceptable
prices for our future products could diminish any revenues we may be able to
generate. Our ability to commercialize future products will depend in part on
the extent to which coverage and reimbursement for the products will be
available from government and health administration authorities, private health
insurers, and other third-party payors. European Union and U.S. government and
other third-party payors increasingly are attempting to contain healthcare costs
by consideration of new laws and regulations limiting both coverage and the
level of reimbursement for new drugs. We cannot predict the likelihood, nature
or extent of adverse governmental regulation that might arise from future
legislative or administrative action, either in the United States or abroad.
Our activities also may be subject to state laws and regulations that affect our
ability to develop and sell our products. We are also subject to numerous
federal, state, and local laws relating to such matters as safe working
conditions, clinical, laboratory, and manufacturing practices, environmental
protection, fire hazard control, and disposal of hazardous or potentially
hazardous substances. We may incur significant costs to comply with such laws
and regulations now or in the future, and the failure to comply may have a
material adverse impact on our business.
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The FDCA includes provisions intended to facilitate and expedite the development
and review of drugs and biological products intended for treatment of serious or
life-threatening conditions that demonstrate the potential to address unmet
medical needs for such conditions. These provisions set forth a procedure for
designation of a drug as a "fast track" product. Concurrent with or after an IND
is filed, the sponsor may request designation as a fast track product, and the
FDA is required to respond within 60 days.
Hatch-Waxman Act
We intend to take advantage of statutory marketing exclusivity provisions for
our products. Under the U.S. Drug Price Competition and Patent Term Restoration
Act of 1984, known as the Hatch-Waxman Act, newly approved drugs and indications
benefit from a statutory period of non-patent marketing exclusivity. The
Hatch-Waxman Act provides five years of marketing exclusivity to the first
applicant to gain approval of an NDA for a new chemical entity, meaning that the
FDA has not previously approved any other new drug containing the same active
ingredient. Hatch-Waxman prohibits an abbreviated new drug application, an ANDA,
or an NDA where the applicant does not own or have a legal right of reference to
all the data required for approval, to be submitted by another company for
another version of such drug during the five year exclusive period. Protection
under Hatch-Waxman will not prevent the filing or approval of another NDA,
however, the applicant would be required to conduct its own adequate and
well-controlled clinical trials to demonstrate safety and effectiveness. The
Hatch-Waxman Act also provides three years of marketing exclusivity for the
approval of new NDAs with new clinical trials for previously approved drugs and
supplemental NDAs, for example, for new indications, dosages, or strengths of an
existing drug, if new clinical investigations are essential to the approval.
This three year exclusivity covers only the new changes associated with the
supplemental NDA and does not prohibit the FDA from approving ANDAs for drugs
containing the original active ingredient.
The Hatch-Waxman Act also permits a patent extension term of up to five years as
compensation for patent term lost during product development and the FDA
regulatory review process. However, patent extension cannot extend the remaining
term of a patent beyond a total of 14 years. The patent term restoration period
is generally one-half the time between the effective date of an IND and the
submission date of the NDA or BLA, plus the time between the submission date of
the NDA or BLA and the approval of that application. Only one patent applicable
to an approved drug is eligible for the extension and it must be applied for
prior to expiration of the patent. The U.S. Patent and Trademark Office, in
consultation with FDA, reviews and approves the application for the patent term
extension. We will consider applying for patent term extensions for our patents
to add patent life beyond the expiration date, depending on the length of
clinical trials and other factors involved in the filing of a NDA or BLA.
Best Pharmaceuticals for Children Act
The Best Pharmaceuticals for Children Act, signed into law on January 4, 2002,
provides an additional six months of marketing exclusivity for new or marketed
drugs for specific pediatric studies conducted at the written request of the
FDA. On December 3, 2003, the Pediatric Research Equity Act was signed into law,
authorizing the FDA to require pediatric studies for drugs and biological
products to ensure the drugs' or products' safety and effectiveness in
57
children. This Act required that new NDAs, BLAs or supplements to NDAs or BLAs
contain data assessing the safety and effectiveness for the claimed indication
in all relevant pediatric subpopulations. Dosing and administration must be
supported for each pediatric subpopulation for which the drug is safe and
effective. The FDA may grant deferrals for submission of data, or full or
partial waivers.
Foreign regulatory requirements
Outside the United States, our ability to market our products will also be
contingent upon receiving marketing authorizations from the appropriate
regulatory authorities and compliance with applicable post-approval regulatory
requirements. Although the specific requirements and restrictions vary from
country to country, as a general matter, foreign regulatory systems include
risks similar to those associated with FDA regulation, described above. Under EU
regulatory systems, marketing authorizations may be submitted either under a
centralized or decentralized procedure. Under the centralized procedure, a
single application to the European Medicines Evaluation Agency (EMEA) leads to
an approval granted by the European Commission which permits the marketing of
the product throughout the EU. The centralized procedure is mandatory for
certain classes of medicinal products but is optional for others. For example,
all medicinal products developed by means of recombinant DNA technology, gene
expression in prokaryotes and eukaryotes, or monoclonal antibody methods must be
authorized via the centralized procedure. We assume that the centralized
procedure will apply to our products that are developed by means of one or more
of such biotechnology processes. The decentralized procedure provides for mutual
recognition of nationally approved decisions and is used for products that are
not required to be authorized by the centralized procedure and those products
for which the centralized procedure is optional but which shall be marketed in
select EU member countries only. Under the decentralized procedure, the holder
of a national marketing authorization may submit further applications to the
competent authorities of the remaining member states which will then be
requested to recognize the original authorization based upon an assessment
report prepared by the original authorizing competent authority. The recognition
process should take no longer than 90 days, but if one member state makes an
objection, which under the legislation can only be based on a possible risk to
human health, we have the option to withdraw the application from that country
or take the application to arbitration by the Committee for Proprietary
Medicinal Products (CPMP) of the EMEA. If a referral for arbitration is made,
the procedure is suspended, and in the intervening time, the only EU country in
which the product can be marketed will be the country where the original
authorization has been granted, even if all the other designated countries are
ready to recognize the product. The opinion of the CPMP, which is binding, could
support or reject the objections or alternatively could reach a compromise
position acceptable to all EU countries concerned. Arbitration can be avoided if
the application is withdrawn in the objecting country, but once the application
has been referred to arbitration, it cannot be withdrawn. The arbitration
procedure may take an additional year before a final decision is reached and may
require the delivery of additional data.
As with FDA approval, we may not be able to secure regulatory approvals in
Europe in a timely manner, if at all. Additionally, as in the United States,
post-approval regulatory requirements, such as those regarding product
manufacture, marketing, or distribution, would apply to any product that is
approved in Europe, and failure to comply with such obligations could have a
material adverse effect on our ability to successfully commercialize any
product.
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Competition
The development and commercialization of new drugs is competitive. We currently
face and expect to continue to face competition from pharmaceutical and
biotechnology companies, academic and scientific institutions, governmental
agencies, and public and private research organizations. Most pharmaceutical and
large biotechnology companies have internal research and development departments
that are focused on immunological diseases. We believe that several
pharmaceutical and biotechnology companies have begun to employ, or are
investigating the importance of, immunological tolerance and T-regulatory cells
in connection with their internal drug discovery efforts.
Although we compete generally with biotechnology and pharmaceutical companies,
those biotechnology and pharmaceutical companies pursuing projects in
immunological tolerance or developing antibodies directed at the same targets as
our products will be our most direct competitors. We are aware that Genmab,
Biogen Idec, and Tanox are developing antibodies directed at the CD4 antigen;
Johnson & Johnson is marketing and Protein Design Labs and an academic
investigator are developing antibodies directed at the CD3 antigen; Biogen Idec
is marketing a fusion protein and MedImmune is developing an antibody directed
at the CD2 antigen; and Lorantis is pursuing research efforts to develop new
therapies involving immunological tolerance. Some of these companies, as well as
other potential competitors, have significantly greater financial, operational,
sales, and marketing resources than us.
Competitors may also develop products that are more effective, safer, or less
costly than any that we might develop, or they may obtain FDA approval for their
products more rapidly than we may obtain approval for ours. In addition, we
compete with these entities, as well as academic and research institutions,
contract research companies, and other firms, to hire qualified scientists and
other personnel.
Employees
As of March 31, 2004, we had 42 full-time employees, 34 in research and
development and 8 in business development, finance, and administration. None of
our employees is represented by a collective bargaining agreement nor have we
experienced any work stoppages. We believe that relations with our employees are
good.
Facilities
Our corporate headquarters is located in Cambridge, Massachusetts. We lease this
36,000 square foot facility for a term which expires in May 2012. We believe
that our existing facility is adequate to meet our current requirements and that
we should be able to obtain additional space if needed.
Legal proceedings
We are not currently a party to any material legal proceedings.
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