Genentech, a bioscience firm famous for its development of antibodies designed to combat cancer, has entered a $350 million agreement with Bayhill Therapeutics to assist in development of BHT-3021, a drug that treats type 1 diabetes by reducing or stopping immune system attacks on pancreatic beta cells.

Under the agreement, Genentech will pay $25 million in upfront to acquire an equity stake in Bayhill, plus another $325 million to finance development of BHT-3021.

Bayhill's drug is based on its BHT-DNA antigen-specific immunomodulatory platform. Put simply, the drug has worked in trials by preventing T cells, the body's immune system's "soldiers" from mistakenly attacking insulin-producing pancreatic islet cells.

It's done by inserting the gene for a protein that is a known target of the autoimmune system into a plasmid. (A plasmid is a small unit of DNA within a cell that can replicate itself independently of chromosomal DNA). In type 1s, the protein in question is proinsulin.

When the plasmid is injected, dendritic cells perceive it as an antigen-a toxic or harmful substance. The cells then take up the plasmid and transport it to T cells, almost as though they are bearing a message that says, "Shields up! Do something!" But before the T cells can do anything, the plasmid binds to them and inactivates them so that they cannot attack pancreatic cells.

In a way, the plasmid takes the battle to the enemy rather than waiting for T cells to strike against beat cells that cannot defend themselves.  

In a 12-week trial involving 42 patients with type 1, Bayhill reports that patients taking BHT-3021 showed better preservation of their C-peptide levels than patients taking a placebo.

In a normally functioning pancreas, proinsulin produced by the beta cells is "cleaved" by enzymes into insulin and C-peptide. When T cells attack beta cells, disrupting and then eventually destroying the production of proinsulin, C-peptide levels plummet. If a therapy can help patients maintain C-peptide levels, the FDA considers that result a strong marker of its effectiveness.

The Genentech buy-in will fund Bayhill's completion of current Phase I/II testing, while Genentech will be responsible for all future research, development, manufacturing and commercialization efforts.

Good Timing for Genentech
The agreement comes at a good time for Genentech. The pioneering biotech company, acquired in March by Roche for $46.8 billion, suffered a recent setback to its attempt to find new uses for its anti-cancer drug, Avastin.

The company was hoping to extend be able to extend revenues from the drug, now at $4.8 billion per year worldwide, to $10 billion. However, the drug failed to perform well in a late-stage study of early-stage colorectal cancer patients.

Genentech's therapies have been based on creating monoclonal antibodies (pure, homogenous antibodies derived from a single clone of cells) to treat cancer. It has also used monoclonal antibodies as an approach in treating rheumatoid arthritis, lupus nephritis and pediatric asthma.

The problem with monoclonal antibodies is that they compromise normal immune system functions, often creating serious side effects and necessitating regular IV infusions. They are not really suitable to the treatment of a chronic autoimmune disease, such as diabetes, which explains Genentech's interest in financing a different approach to creating therapies.

Given the epidemic nature of diabetes, the company's decision to help bring BHT-3021 to completion could soon be seen as a wise move to step outside its comfort zone