SCS licenses gene expression tech to Lexicon

Stem Cell Sciences (AIM:STEM, SCS) has granted US-based biopharmaceutical company Lexicon Genetics an exclusive license to its Internal Ribosome Entry Site (IRES) technology for genetically modified mice.

IRES technology is used to enhance accuracy of gene expression in genetically altered mice and cultured stem cells, by enabling selectable markers -- such as a fluorescent protein or an antibiotic resistance -- to be more easily identified.

"It's a way of enabling the easier manipulation of DNA," said SCS development manager Megan Munsie. "When the ribosome is reading through the DNA it allows for the correct reading frame."

Lexicon, a company focused on discovery and development of treatments for a range of human diseases primarily using its proprietary gene knockout technology, obtained a non-exclusive research license to the IRES technology in 2004. Lexicon used IRES in conjunction with its gene targeting technology to translate reporter genes in genetically altered mice and mouse embryonic stem cells.

"This is moving from a research license to a commercialising license," said SCS director and general manager David Newton. "They couldn't license their technology to others without having access to our technology, and therefore taking a license."

Lexicon currently makes more than US$70 million from the sale of transgenic mice to the pharmaceutical industry. By combining SCS's IRES technology with its own technology, Lexicon will be able to generate 'knockout' mice more rapidly, Munsie said.

Under the terms of the exclusive license, SCS will receive an upfront payment from Lexicon and will share in future revenues generated by sublicenses to the IRES technology. While the actual figures are confidential, Newton said the amounts were "significant".

Lexicon has also granted SCS certain non-exclusive rights to its patented proprietary gene targeting technology for use in stem cell and progenitor cell lines.

"We believe Lexicon is the ideal partner to develop the full commercial value of our IRES patent position with respect to mouse models," said SCS president and CEO Peter Mountford in a statement. "This agreement also enables SCS to expand the range of products it can offer to pharmaceutical company customers from its stem cell-based drug discovery platform."

Mountford is currently in the US, following SCS's decision to establish an office there. Newton said that "this agreement underlies the importance of having a presence in the US".

The deal with Lexicon is the third licensing agreement that SCS has signed since it listed on the UK's AIM market in July. The first was an agreement with Deltagen, for a non-exclusive license over IRES, and the second was with Chemicon, for the sale and distribution of specialty cell culture media, worth US$2.5 million as well as a double-digit royalty stream.