CAT and AZ in strategic alliance

AstraZeneca is to take a 19.9% equity stake in UK biotechnology company, Cambridge Antibody Technology.

The alliance will be in the discovery and development of human monoclonal antibody therapeutics, principally in the field of inflammatory disorders, including respiratory diseases, and will be co-funded and co-managed by the partners.

The principal terms of the collaboration agreement between the two parties are summarised below:

• The alliance will include a five-year discovery initiation phase during which the partners will jointly initiate a minimum of 25 discovery programmes. The committed joint research investment will be a minimum of $175m during this phase which the parties will fund 50:50. CAT will contribute the greater part of the resource in this discovery phase and expects to commit between 100 and 150 scientists per year to the programme at its peak, most if not all of which will come from existing resources. The principal focus of the discovery programmes will be in inflammatory disorders, however the research may extend to other therapeutic areas.

• following the completion of the discovery phase, the parties may each elect to continue funding programmes into development. If both parties so elect, the programme will be jointly funded until clinical proof of concept (CPC) (end of Phase IIb trials), unless either party opts-out earlier. In addition, CAT has the option to continue to fund jointly the development of one in every five products that reach CPC up to product launch.

• CAT's financial participation reflects its level of investment in the programme. If CAT opts-out after the discovery phase it receives milestones and royalties. If it opts-out at CPC it receives milestones and royalties at a higher level. For those programmes which it funds to product launch it receives higher royalties, sales milestones and an option to co-promote these products in the US. If AstraZeneca opts-out of programmes it receives milestones and royalties.

• AstraZeneca will receive the rights to opt-in to, and develop jointly, CAT discovery programmes existing at the commencement of this alliance and also certain future discovery programmes that CAT may independently initiate. CAT has rights to co-promote in the US products resulting from these programmes.

• CAT will be principally responsible for antibody discovery, manufacturing process development and the supply of material for exploratory clinical trials. AstraZeneca will be principally responsible for translational biology, clinical development programmes, regulatory filings and commercialisation. Joint teams will be established to oversee the full discovery and development process.

• CAT anticipates that its investment in the alliance will be the principal focus of its research investment during the next five years.

Under a separate subscription agreement, AstraZeneca will buy shares in CAT with a total investment of £75m. Based on CAT shares in issue as at 21 November 2004, this represents a 19.9% interest.

Peter Chambre, chief executive officer of CAT, commented: 'This innovative alliance with a world leader in the field of inflammatory diseases represents a major strategic move by both companies. Not only will it enable CAT to deploy its full range of capabilities and expertise in the early stages of product development, but it will also allow us to enhance our capabilities in the later stages and, for the first time, potentially participate in product commercialisation. Most significantly, CAT will share directly in the successes of products which result from the collaboration and it is therefore an important and exciting opportunity for us to make a significant advance in our transition to a product-based biopharmaceutical company.'

Sir Tom McKillop, chief executive officer of AstraZeneca, said: 'I see this alliance with Cambridge Antibody Technology as a major component of AstraZeneca's strategy to develop new therapeutics for inflammatory and respiratory diseases. Both partners are combining their expertise and making a significant commitment of resources to the alliance.'