Dear
Shareholders:
The year 2000
was one of consolidation for American Biogenetic Sciences,
Inc. (ABS), a year when we successfully brought into sharper
focus the progress we had been steadily making on several
distinct fronts—internal organization, commercial
achievements and scientific advances.
Our progress
was based on our strong portfolio of intellectual property.
ABS owns more than 75 issued U.S. and foreign patents
and more than 100 U.S. and foreign patent applications
pending in the areas of monoclonal antibody (Mab) technology,
neurological compounds, cardiovascular diagnostics and
therapeutics. During 2000, the commercial promise of our
intellectual capital was reaffirmed as large pharmaceutical
companies, including Abbott Laboratories, showed their
interest in partnering with us for mutual benefit.
INTERNAL
ORGANIZATION
The year was
highlighted by a number of key management and Board additions.
These changes created a better framework for more efficient
and effective company leadership. We also recruited experienced
consultants to enhance our commercial outreach for new
partnering and licensing arrangements.
Management
transitions included the promotion of Josef C. Schoell
to President and Chief Operating Officer. Mr. Schoell
was also named to the Board. Mr. Schoell has been with
ABS since 1992 serving in corporate development and as
Chief Financial Officer. Mr. Schoell replaced John S.
North, who stepped down for personal reasons in January
2001. Alfred J. Roach, Founder and Chairman of the company,
reassumed the position of Chief Executive Officer.
James McLinden,
Ph.D. was named Chief Scientific Officer. Dr. McLinden,
who has been with ABS for 13 years, possesses exemplary
scientific qualifications. He has extensive experience
interacting with ABS’ Global Scientific Network partners
that gives ABS worldwide connections to top-tier researchers
and their institutions.
Joseph M.
Danis was elected to the Board of Directors and retained
as a consultant for Business Development and Licensing.
Mr. Danis comes to us from Pfizer with many years of licensing
expertise and valuable relationships in the biotech and
pharmaceutical industries.
These management
changes were made to accomplish the company’s ultimate
goals, which are to bring the products candidates in our
R&D pipeline to commercial fruition more quickly;
establish licensing partnerships for our products and
technology; and attract additional capital.
COMMERCIAL
ACHIEVEMENTS
We achieved
significant advances in licensing agreements and other
relationships with well-known and highly respected companies,
the two most significant being a partnership with Abbott
Laboratories for a neurological product and a R&D/licensing
agreement with Biosite Diagnostics, Incorporated for our
antibody-based cardiac marker, TpP, announced subsequent
to the year-end.
The credibility
of our partner companies, along with their powerful marketing
capabilities, will be a significant factor in ABS gaining
the market recognition our products warrant. We are confident
that our licensing agreements will generate important
returns in the near-term as certain milestones are reached.
Abbott
Agreement
In January
2000, ABS signed a license agreement with Abbott Laboratories
for ABS’ neurological compound, called ABS-103, a
small molecule being developed for the treatment of epilepsy,
mania associated with bipolar depression and the prevention
of migraine headache. Under the terms of the agreement,
ABS is entitled to milestone payments of $17 million,
as the compound progresses through development and regulatory
approval as well as royalties on ultimate sales of the
drug when approved.
Abbott has
indicated that ABS-103 is one of the candidates being
evaluated to become the next generation version of Depakote,
Abbott’s best selling U.S. drug and the one which
underpins its $700+million franchise in anticonvulsant,
bipolar, and migraine therapies.
In preclinical
studies conducted by ABS, ABS-103, has shown anticonvulsant
activity without sedation, is not associated with increased
incidence of birth defects, has lower side effects and
a better safety profile than valproic acid.
According
to biopharmaceutical consultants Paisley and Habermas,
sales of an enhanced Depakote by Abbott could reach $450
million in the second year of introduction, growing to
peak sales of $3 billion. This could provide an exceptionally
strong royalty stream for ABS. The full report from Paisley
& Habermas is available on our website at www.mabxa.com/research.html.
Trevigen
Agreement
In May 2000,
ABS extended its collaboration with Trevigen, Inc., a
Gaithersburg, MD biotechnology company. We also combined
the resources of ABS' patented antigen-free technology
with Trevigen's expertise in DNA damage and repair. The
Trevigen contract has so far resulted in the development
of an antibody-based assay currently being marketed to
biomedical researchers involved in the study of DNA damage
and repair. ABS has and will continue to receive revenue
from the manufacture of the antibody as well as royalties
on product sales.
Biosite
Agreement
Subsequent
to year-end, we completed a non-exclusive agreement with
Biosite Diagnostics, Incorporated under which Biosite
will validate our TpP diagnostic marker and antibodies
for potential use with its rapid, quantitative Triage
Meter testing platform. Should Biosite decide to include
TpP as a marker on its highly successful panel, it will
purchase antibodies from ABS and pay milestone fees and
royalties. Part of Biosite’s validation work will
be done in collaboration with a study group at Brigham
and Woman’s Hospital in Boston, MA, an investigative
team that has been at the forefront of clinical research
of acute coronary syndromes for the past two decades.
We believe
that partner companies such as these can be a valuable
resource because they can provide ABS additional funding,
perform additional testing necessary to obtain regulatory
approvals and make available clinical, manufacturing and
marketing expertise. The company is also discussing other
collaborations and contract services involving our core
Antigen-Free (AF) technology. Our AF technology produces
antibodies of high affinity and specificity that are the
keys to a very wide range of diagnostic and therapeutic
products.
International
Alliances
Additionally,
ABS’ own in-house research, as well as research conducted
by our Global Scientific Network—in the U.S., Ireland,
Germany, Russia and China—will continue to work on
developing potential products that can be licensed to
large pharmaceutical companies. These development programs
are aimed at important markets in diagnosing and treating
cardiovascular disease and neurological diseases, and
disorders such as Alzheimer’s and Parkinson’s.
SCIENTIFIC
PROGRESS
ABS reported
significant advancements during 2000 in each one of our
research program areas:
- AF technology
– the source of the highly specialized, monoclonal
antibodies with high affinity and specificity that serve
as the basis for many of our products
- Immunodiagnostic
assays for cardiovascular-related illnesses, and
- Compounds
for the treatment of neurological disorders.
Progress occurred
on a number of fronts. We expanded the utility of our
existing neurological products and monoclonal antibody
technology for other disease indications. At the same
time we are significantly speeding up the development
of our neurological research programs. Details of our
scientific progress and other expansions of our other
product components in 2000 can be found in our Annual
Report, but several highlights deserve mention now.
Expansion
of Product Pipeline
Our aggressive
efforts to expand the uses of our current product portfolio
has been showing results. For example, we have expanded
the utility of MH1, an antibody utilized in our thrombosis
diagnostic assay, called Thrombus Precursor Protein (TpP).
MH1 is now being investigated for use as a novel, cancer
targeting agent to deliver therapeutic treatment directly
to malignant or benign tumors such as breast, prostate,
colon and pancreatic cancers.
Validation
from AHA Journal
Significantly,
we also gained further validation from independent authorities
for the superiority of our diagnostic test kits and our
antigen-free technology for developing monoclonal antibody-based
products. In October, the Journal of the American Heart
Association, Circulation, reported that ABS’ test
to measure levels of fibrinogen, called the Functional
Intact Fibrinogen Assay (FiF®) test, were more strongly
associated with cardiovascular disease than the current
standard fibrinogen assay.
In summary,
our efforts in 2000 on multiple fronts resulted in a number
of successful outcomes. Our further-refined focus points
the way to increased shareholder value for ABS in 2001
and beyond. ABS is in a strong position to manage rapid
growth, partially because of the company’s low fixed
capital requirements as a result of its access to technology
within the Global
Scientific Network.
Recently,
ABS commissioned biopharmaceutical industry analysts Paisley
and Habermas, Inc. to review the scientific and commercial
merits of the company’s neuroscience and monoclonal
antibody technology programs and products. Their comprehensive
report puts the company’s research efforts in context
with the marketplace, an important step in helping to
attract partners for licensing our research and technology.
The report,
available on this Website, also provides expert validation
that our research programs and product candidates are
strategically linked to a solid business model with substantial
opportunities for success in a wide variety of diagnostic
and therapeutic applications.
We could not
be reporting this progress without the enthusiastic support
and active contributions from our Scientific Advisory
Board, our Directors, our shareholders and, of course,
the men and women who form the ABS team. We thank all
of you for your continued patience as ABS continues its
advance toward increased shareholder value.
Sincerely,
Alfred J.
Roach
Chairman & CEO
Josef C. Schoell
President, COO & CFO
May, 2001
