(FORTUNE Magazine) – IN THE CLOSELY WATCHED arena of biotechnology, the spotlight so far has been on genetic engineering -- tinkering with the genetic blueprints of living things to try to devise exciting new products, from frost-resistant crops to powerful vaccines. Recently a supporting player has come on stage that could seriously rival the star: mass-produced monoclonal antibodies derived from the body's natural defenders against infection and disease. Scientists have vastly improved on those defenders and put them to new uses. Monoclonal antibodies are now poised to have a major impact on medicine, ranging over the whole spectrum from cancer to heart attacks to infections caused by bacteria and viruses. Monoclonals, tiny proteins produced in the body by specialized white blood cells as part of the immune system, are already commonplace in food processing, where they are used to remove impurities, and in kits -- some of them sold over the counter -- that quickly detect a variety of diseases and conditions from cancer to pregnancy. The big medical news about monoclonals now is their imminent commercial introduction for use inside the body to reveal in X-ray-like pictures diseased or damaged tissue that could not be seen before. The even bigger news goes beyond diagnostic applications. The first entrants will soon appear in what is widely expected to become a huge market for monoclonal antibodies that actually treat disease. They will do it far more efficiently than existing methods -- for example, in fighting cancer they will substitute precisely targeted ''magic bullets'' for the present brute-force and often risky techniques of radiation and chemical therapy. ''We are talking about a Star Wars sort of medicine,'' exults Stelios Papadopoulos, a vice president for research at Drexel Burnham Lambert. One new product already on the market is an antibody made by Johnson & Johnson that blocks kidney rejection during transplants; another, from Burroughs Wellcome, mops up any potentially dangerous excess of the drug digitalis when it is given to heart attack victims. There are indications that the versatile antibodies could eventually be turned into hunter-killers programmed, say, to recognize a protein on an AIDS virus particle, lock onto that protein, destroy it, and hurry on to the next AIDS intruder to repeat the procedure. Even pets will benefit from therapeutic monoclonals. Under development, for instance, is a monoclonal vaccine against the devastating heartworm that affects up to 50% of dogs in some parts of the U.S. and a small number of cats. JUST OVER THE HORIZON shimmer other spectacular possibilities, including effective treatment of allergies and such cripplers as rheumatoid arthritis, which are caused by overreactions of the immune system that cannot be counteracted effectively today. In those cases the body starts attacking its own tissues as foreign; monoclonals could be developed that would tie up the harmful excess of protective antibodies in the bloodstream. Companies and security analysts expect the market for all these applications to reach several billion dollars a year as early as 1990. So fast is the field growing that sales of monoclonal-based detection kits are increasing 50% a year. In 1987 they are expected to reach $300 million -- more than the estimated $250 million for all genetic engineering products combined. As more kits are introduced for use in hospital labs, in doctors' offices, and at home, this segment of the antibody market alone is likely to spurt to $1 billion in 1990, according to Frost & Sullivan, a New York City market research firm. Diagnostic imaging and therapeutics are also expected to become a $1-billion-a-year market in the early 1990s. Once therapeutic antibodies arrive in force, probably by the mid-1990s, the antibody market will soar. Stuart Weisbrot, an analyst with Prudential-Bache Securities, says total annual sales could then reach $7 billion. Companies big and little stand to benefit from the coming bonanza. All told, according to a recent survey by SRI International, more than 1,000 companies around the world are working on one application of monoclonals or another. Among the smaller U.S. participants are such specialized biotech houses as Synbiotics of San Diego, Cetus of Emeryville, California, Centocor of Malvern, Pennsylvania, and Damon Biotech of Needham Heights, Massachusetts, which have annual sales ranging from $4 million to $50 million. The larger players include big pharmaceutical companies like Eli Lilly, which acquired the original monoclonal antibody venture, Hybritech of San Diego, last year for $370 million. Others: Abbott Laboratories, Johnson & Johnson's Ortho Pharmaceutical Corp. subsidiary, and Bristol-Myers, which bought Genetic Systems of Seattle for $290 million in 1986. Also exploring the antibodies' diagnostic and therapeutic capabilities are some giant companies not previously associated with medicine and health: Dow Chemical, Du Pont, and Kodak. In Europe the major participants include Biogen in Switzerland, West / Germany's Boehringer Mannheim, and Celltech in the U.K. Japan has still more -- Sumitomo Chemical, Suntory, Toray-Fuji Bionics, Yamasa Shoyy, and Otsuka Pharmaceuticals, among others. Monoclonal antibodies can both detect and heal disease because they recognize and attach themselves to foreign invaders: bacteria, viruses, cancer cells, and chemicals like the drug digitalis. First developed only a dozen years ago, they are laboratory-produced versions of the body's natural disease-detecting and disease-fighting antibodies, which medicine has made use of for nearly two centuries. In the 1790s the British physician Edward Jenner introduced inoculation with a virus to produce immunity to smallpox. When the body is challenged by an intruding substance such as a virus, white blood cells called B lymphocytes start turning out hundreds of different types of antibodies. Antibodies themselves seldom kill; they are more like scouts that locate the invaders and sound the alarm that triggers other defense mechanisms. ''Killer'' T cells (another type of white blood cell) and other immune-system substances hurry to the scene to administer the coup de grace. ''When the antibody lands on a tumor cell, it sends out the signal, 'T cells! Come help!' '' says Herbert F. Oettgen, chief of clinical immunology at the Memorial Sloan-Kettering Cancer Center in New York City. Antibody molecules are about one hundred thousandth the diameter of a human hair; they are Y-shaped, and on top of the Y are pockets that fit a specific receptor on the surface of an invader. The shape of the pockets varies. Since so many different invaders can enter a human body during its life -- and can attack at any one time -- the body needs a gigantic supply of antibodies, each tailored to fit the markings of a particular invader. One problem for scientists developing monoclonal antibodies is that the body engages in overkill: It makes more different antibodies than necessary to mark a single intruder. Hundreds of different antibodies, for instance, can stick to all sides of a cancer cell circulating in the blood. Some stick better than others. Since a cancer cell is a normal cell gone bad, the surfaces of the two cells may differ by only a single receptor. Each receptor sticks up from the surface of the cell like a periscope on a submarine. What scientists needed was an antibody that would unerringly go for that target ''periscope'' and nothing else. The field took a tremendous leap forward in 1975 when two scientists working in a British government-supported lab, Cesar Milstein and Georges Kohler, devised a way to mass-produce those periscope spotters -- specific, or monoclonal, antibodies. Mono means single, and clone denotes a population of cells or molecules derived from a single ancestor; every cell or molecule in a clone is genetically identical. Milstein and Kohler were looking for a way to obtain a specific antibody that would unerringly seek out a specific target on a specific cell and that could be produced in unlimited amounts. BECAUSE the B lymphocytes that manufacture antibodies do not survive long outside the body, Milstein and Kohler created a hybrid cell, or hybridoma, to serve as an antibody factory. Where monoclonals are concerned, the mouse is man's best friend because of the close structural similarities between the antibodies of mice and men. The two scientists combined a B lymphocyte taken from a mouse immunized against human liver cancer with a cancer cell from the bone marrow of another mouse. Paradoxically they used a distinctive feature of cancer cells to produce a cancer fighter: Since cancer cells can reproduce almost indefinitely in a lab dish, incorporating them in the hybrid assured the scientists of an uninterrupted supply of antibodies. From the resulting hybrid cells the scientists selected the one that turned out the single specific antibody they wanted. They then cloned the cell, making it a tiny assembly line for monoclonal antibodies that were all identical periscope spotters. For their feat, Milstein and Kohler won a Nobel Prize in 1984. What scientists have been doing with monoclonal antibodies since 1975 ranges from trying to bolster weakened immune systems to investigating the possibility that, because of their great specificity, antibodies could be made to destroy AIDS virus particles -- Papadopoulos's ''Star Wars medicine.'' On top of that, scientists are beginning to use monoclonals to overcome a common hazard of conventional vaccines. Because an ordinary vaccine contains virus particles that may not have been killed, anyone inoculated with it may actually get the disease from the vaccine. By using antibodies that mimic a single distinctive characteristic of a virus cell rather than the entire deadly virus, scientists could stimulate the body to mount immune defenses without any risk that an immunized person would succumb to the virus. The antibody vaccine would merely present the fingerprint of the culprit virus, enough to stimulate an antibody attack against the real virus if the immunized person or pet became infected with it. While antibodies today are clearly revamping the map of diagnosis and treatment, Milstein and Kohler never benefited from their discovery financially because their sponsors didn't bother to patent it. Some enterprising U.S. venture capitalists and scientists, however, recognized the promise of monoclonal antibodies even then. Three years after Milstein and Kohler created their initial hybridomas, the first company to market monoclonal antibodies, aptly named Hybritech, was formed by a group of university scientists and business executives with backing from the fabled San Francisco high-tech venture capital firm Kleiner Perkins Caufield & Byers. THAT OPENED the floodgates. According to Drexel's Papadopoulos, at least a dozen small start-ups are now devoted solely to monoclonal antibodies. Established biotech and pharmaceutical companies quickly joined in. As in the better-known field of genetic engineering, where patent battles are raging over ownership of specific molecules, patent lawsuits are being fought over monoclonals. In March a federal judge in San Francisco granted a motion by Hybritech for a preliminary injunction against the sale of most of the detection kits marketed by Monoclonal Antibodies Inc., a small Mountain View, California, company that Hybritech has accused of patent infringement. So far, however, the inevitable patent battles haven't stopped or even slowed the runaway growth of the field. While only five genetically engineered products have reached the market, more than 100 monoclonal-based products are already on sale. Because much of the new activity is generated by small entrepreneurial companies, big corporations have been exploring three different ways to board the monoclonal bandwagon. They can try to buy smaller companies, as Lilly and Bristol-Myers have done. They can set up their own research staffs, although big companies cannot offer quite the same excitement as working on a tightly knit team with a minimum of bureaucracy -- or the prospect of a mammoth payoff from stock options if the research succeeds. Finally, the big players can enter into joint ventures with the smaller firms, often providing marketing help and support for research. This is where the most frantic activity is in progress right now. A typical example: Last summer Kodak plunked down $13 million for an additional 12% equity in privately held NeoRx Corp. of Seattle, on top of the 32% it paid $5 million for in 1984. Kodak also has made a multimillion-dollar commitment to fund research and development at NeoRx. In addition, Kodak has invested $21 million in Cytogen Corp. of Princeton, New Jersey. Pfizer is putting money into Xoma Corp. of Berkeley, California, and Johnson & Johnson has taken out licenses from various small antibody companies, including Immunomedics Inc. of Newark, New Jersey, and Chiron Corp. of Emeryville, California. The stocks of many of those small companies -- Synbiotics, Centocor, and Xoma, for instance -- are traded on the national over-the-counter market. Analysts feel their shares are still undervalued in light of the promise of their products. Many monoclonal antibody companies have no earnings yet. Centocor, one of the few that does, has a P/E ratio of 40, compared with 330 for Genentech, the flagship genetic-engineering company that investors have flocked to. Hambrecht & Quist's J. Misha Petkevich lists Centocor, Cetus, and Xoma as good buys and says, ''The long-term prospects are very positive.'' Any benefit to Lilly from Hybritech, on the other hand, is a lot longer off, Petkevich feels, because of Hybritech's relatively small size compared with its parent. Most of the commercial activity so far has centered on those diagnostic kits. Some are dipstick tests of blood, urine, or other body fluids that can be administered in minutes in a doctor's office or at home; monoclonals seek out hormones or disease-carrying viruses and microorganisms. Immersed in a woman's urine sample, for example, the dipstick turns blue to indicate that she is pregnant if the monoclonals detect the chorionic gonadotropin hormone. The field is far from saturated. Lilly's Hybritech, a leading kit seller, offers 20 different tests and has more than 20 others in development. ''We see diagnostics as a major area for the future,'' says David F. Hale, Hybritech's president and C.E.O. He notes that monoclonal-based kits are enhancing delivery of health care. A Hybritech test kit for streptococcus bacteria, for instance, allows a doctor to find out in his office in minutes whether a patient has strep throat. A conventional laboratory culture can take days. In other so-called in vitro tests, fluorescent dyes are used to tag antibodies that hook onto foreign cells. A rapid expansion of monoclonal antibodies into diagnostic imaging -- the second potentially large area of use -- is now under way. Leading the way toward product introduction is NeoRx, with a number of other companies such as Centocor, Xoma, and Cetus in hot pursuit. In this application, monoclonal antibodies are linked with packets of radioactive isotopes and injected into a patient. A gamma-ray camera, similar to an X-ray machine, then produces a scanning image that reveals the presence of any cancers or diseased tissue. Trials at the National Cancer Institute show that monoclonal antibodies can detect cancers that do not show up on X-rays and CAT scans. NeoRx is conducting final clinical trials of antibodies that spot melanoma, an especially virulent cancer than begins in the skin and usually spreads rapidly through the body. Centocor is already marketing in Europe an antibody that identifies damage to the heart muscle after an attack; approval by the U.S. Food and Drug Administration is expected toward the end of next year. Centocor's antibody will cut down on guesswork: About 35% of patients complaining of chest pain are now needlessly assigned to coronary treatment units, while 5% of those whose hearts have been damaged by attacks are sent home as a result of inadequate or faulty diagnosis. Centocor President Hubert J.P. Shoemaker says the imaging business ''has the potential of being five, ten times bigger than the blood test business.'' Using monoclonal antibodies to treat now-intractable diseases offers the most dramatic possibilities of all. For example, Paul G. Abrams, medical director of NeoRx, hails the arrival of monoclonals in cancer therapy as ''the fourth revolution in cancer treatment.'' (The first three were surgery, radiation, and chemotherapy.) Already on file with the FDA are more than 60 applications for therapeutic use of monoclonals. Joining soon the two products already on the market -- Ortho's antibody that eases kidney transplants, and Burroughs Wellcome's antibody that binds excessive molecules of digitalis -- are likely to be a number of new ones. They will include antibodies from Centocor, Xoma, and Cetus for treatment of septic shock, a severe bacterial infection that often accompanies surgery. It kills some 80,000 people a year in the U.S. alone, making it more devastating so far than AIDS. Present treatment with antibiotics inactivates most of the infecting bacteria. But even after they die, bacteria still in the body continue to give off a killer toxin. Now the toxin molecules can be mopped up with antibodies that attach themselves to the toxin receptors. The ease and speed with which results can be demonstrated in septic shock contrasts sharply with the long time it takes to find out whether a cancer treatment is effective. The initial trials of monoclonal antibodies tipped with radioactive isotopes and cancer-killing drugs have just begun. Although researchers are getting positive results in many tests, the first antibodies for treating cancer are not likely to be approved by the FDA for at least three years. In the forefront of development work are NeoRx, Xoma, Centocor, Cytogen, and Lilly's Hybritech, with such dark horses as Dow and Du Pont also in the race. The excitement about the onslaught of monoclonals against cancer is based on their startling specificity. They have already made possible a 50-fold increase in the amount of radiation that can be delivered to tumor sites, and clinicians are talking about raising that figure 1,000 times more. That, of course, would be an enormous improvement over today's blunderbuss irradiation methods, which often damage healthy tissue and organs. Furthermore, antibodies can carry much more powerful drugs than can be given by injection, and can deliver them directly to cancer cells. For every two cancer cells that it kills, a conventionally administered chemical kills one normal cell. Scientists believe that with antibodies they can change that ratio to 10,000 cancer cells killed for every dead normal cell; eventually they hope to avoid destroying any normal cells. AS AN ANTICANCER weapon, monoclonal antibodies will be particularly useful against cancers of the blood and small tumors. Large tumors will still have to be surgically excised, but monoclonal antibodies could then destroy the remaining cancer cells to prevent their spread. As antibodies move into therapeutic applications, vastly greater amounts of the substances will be needed. So few are required in the diagnostic tests that one mouse can supply enough for 20,000 kits. Production in the quantities necessary for therapeutic uses is something else again. To produce one gram (1/28 of an ounce) takes 200 to 500 mice, which are time-consuming and costly to look after. To meet growing demand, a shift toward large-scale synthetic manufacturing of antibodies is under way. The approaches include fermentation in deep tanks, a process somewhat akin to making antibiotics except that hybridomas are used instead of bacteria. A number of other techniques show promise. Damon Biotech encloses hybridomas in microcapsules to protect the cells from contamination and disturbance. The porous capsules, kept in tanks, admit the nutrients and oxygen necessary to allow hybridomas to turn out antibodies. Security analysts give this technology a good chance to emerge as a major means of antibody production. Damon Biotech already supplies antibodies to 30 companies, including NeoRx and the Swiss giant Hoffmann-La Roche, as well as to the National Cancer Institute.

One important but so far unanswered question is whether a complete shift from mouse to human antibodies will be necessary. While about 70% of the genes in mouse and human antibodies are identical, the 30% difference could cause people to reject mouse antibodies administered over extended periods. So far, mouse monoclonals have not been given to people long enough to know for sure. To circumvent that potential roadblock, companies are beginning to try such approaches as combining parts of mouse antibodies with human ones. Some companies, Centocor and Cetus among them, have already developed human antibodies, which are unlikely to be rejected. Even as those issues are being resolved, new work in the field is racing ahead. Second-generation ''anti-idiotypic'' monoclonal antibodies are already being developed that can lock onto a wider variety of receptors -- including those on other antibodies. The body also produces this type of antibody naturally -- for example, to turn off an immune system reaction once it has done its job. At that point anti-idiotypic antibodies start to circulate, fitting like keys into the receptors on disease-spotting antibodies and shutting them down. Anti-idiotypic antibodies can be made to mimic the structure of any portion of any molecule that reacts with other molecules. For example, such antibodies could stimulate sweetness receptors on the tongue, making possible new kinds of harmless artificial sweeteners.

An early entrant into this field, Synbiotics Corp. of San Diego, is using the technique to develop a vaccine for heartworm in dogs and cats. Edward T. Maggio, president of Synbiotics, says that with anti-idiotypic antibodies, ''you can literally create, in theory, any bio-reactive protein you want, without having to go through the genetic engineering process.'' Maggio feels that anti-idiotypic antibodies will emerge as the ''third pillar'' of biotechnology -- joining more generalized monoclonals and recombinant DNA, the key to genetic engineering. Anti-idiotypics could vastly extend the use of antibodies in industry. Their ability to mimic various biochemical interactions could lead to such products as new food flavors, new kinds of pesticides, and new industrial chemicals. Scientists are just beginning to develop another exciting new class of monoclonal antibodies that would act as hunter-killers of disease in their own right, rather than simply as spotters and carriers of packets of medication. These so-called catalytic antibodies would not only recognize specific cancers, viruses such as AIDS, or other intruders, but also have the built-in ability to destroy them. Unlike conventional monoclonals that stick to one target, they could disengage from its remains and move on to the next. Says Lloyd J. Old, a noted researcher at Sloan-Kettering: ''The future really comes very fast in this field.''