The two companies have entered into a manufacturing supply and technology transfer agreement involving Arius' lead candidate CD44 cancer stem cell antibody, an anticancer antibody targeting a novel epitope of CD44 found in breast, colon and prostate cancers.
The drug is yet to be approved as an Investigational New Drug (IND) by the US Food and Drug Administration (FDA).
A pre-IND meeting is scheduled for January.
Avid has already begun a manufacturing supply of the drug for human clinical trials, which Arius expects to initiate next year.
"The initiation of manufacturing and the scheduling of our pre-IND meeting with the FDA in January reflect the significant progress we have made with our CD44 cancer stem cell programme," Arius chief executive and president Dr David Young said in a statement.
"Avid has proven expertise in the scale-up and manufacture of clinical and commercial grade antibodies and will provide us with a supply of our CD44 targeting drug to initiate human clinical trials in 2008, subject to the clearance of our IND by the FDA."
According to Avid business development vice president F. David King, the agreement shows the company's direction in the future for forming partnerships with companies to take advantage of the biotech and biopharma manufacturing services the company offers.
"This new agreement reflects our extensive experience and broad capabilities in manufacturing monoclonal antibodies, as well as the good working relationship we have already developed with the Arius team."
Preclinical data from a dose-ranging pilot toxicology study in non-human primate models demonstrated no dose-limiting toxic effects at doses up to 95mg/kg and significant tumour growth inhibitory activity in in vivo animal models of breast, prostate, liver and AML cancers.
The CD44 cancer stem cell programme was generated using Arius' proprietary FunctionFIRST technology, which selects antibodies based on their ability to kill cancer cells.
The technology has enabled Arius to assemble a portfolio of more than 400 antibody candidates.
Terms of the contract were not disclosed.