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President's Letter





American Biogenetic Sciences, Incorporated
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President's Letter

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

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1375 Akron Street, Copiague, NY 11726- telephone 631-789-2600, fax 631-789-1661

American Biogenetic Sciences, Inc. ©2000
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