YM BioSciences Inc. offered to buy Australian drug firm Cytopia Ltd. in a deal valued at C$10 million (US$9.44 million), which would add two additional cancer programs to the Canadian biotech's pipeline.
"The upside is, we have a much broader portfolio," David Allan, YM chairman, CEO and director, told BioWorld Today.
And Cytopia would benefit from a North American presence while it maintains operations in Melbourne, Australia.
The merger deal could close around late January 2010, pending a court-supervised process and shareholder meetings. Under the deal, YM is issuing 7.2 million shares that translates to C$10 million.
"This merger provides the best opportunity available for the continued development and expansion of our lead programs, and also provides our shareholders with exposure to a broader portfolio of potential cancer therapies and geographic diversification," Cytopia CEO Andrew Macdonald said in a statement,
The merged companies also will manage other collaborations in the Cytopia portfolio, including the partnership with a government-supported program to develop FAK (focal adhesion kinase) inhibitors for cancer.
Cytopia is holding more than 4,000 tyrosine kinase inhibitors and other small-molecule compounds for further development.
YM's pipeline, which includes Phase III antibody nimotuzumab aimed at multiple tumor types, would expand to include Cytopia's JAK2/JAK1 inhibitor (CYT387) in Phase I/II for myeloproliferative disorders, and a Phase II vascular-disrupting agent (CYT997) designed to work alongside Avastin (bevacizumab, Genentech Inc.) to disrupt tumor blood flow.
Avastin works to kill off new vasculature, the blood vessels that feed the tumor, while CYT997 is designed to disrupt the established tumor vasculature, Allan said.
CYT997 is in a 35-patient, dose-escalation Phase I/II trial in combination with carboplatin in relapsed glioblastoma multiforme patients. Preliminary data from that trial could come in mid-2010, with a randomized Phase II combination trial possible in 2011.
CYT997 is one of very few oral VDAs in clinical development. Other clinical-stage VDAs include Oxigene Inc.'s Phase III product for anaplastic thyroid, Antisoma plc's Phase III candidate for non-small-cell lung cancer and Abbott's Phase II VDA for various diseases.
Among the potential advantages is that Cytopia's product is oral, allowing it to be given in smaller quantities than intravenous administration, Allan noted.
Quite a few JAK inhibitors, however, already are in development by companies like Incyte Corp., Eli Lilly and Co., and TargeGen Inc., according to YM. Cytopia's JAK2 inhibitor so far has been shown to be just as effective as other JAK1 and JAK2s in preclinical models. And if it is shown to minimize the safety problems seen with other JAK2 inhibitors, that could be a differentiating feature, Allen said.
No selective JAK2 inhibitors have successfully completed late-stage trials. Cytopia's JAK2 inhibitor has been cleared for a Phase I dose-ranging/safety trial in patients with myelofibrosis. Phase I data could come in mid-2010, and the Phase II randomized study could follow in 2011.
The JAK2 target has been a hot area, and Cytopia said it received considerable interest from potential partners.
YM's nimotuzumab, which currently is approved in 21 countries, is expected to report Phase III data in the first half of 2010. If it is successful, Allan said, the "small dilution" of YM shares from the merger deal would be "meaningless" compared to the substantial value that the company would see.
The cost of the deal for YM is about $1 million for fiscal year 2010 and about $3 million for fiscal 2011.
Allan called it a big year for the company and a turnaround from a year ago when shares were trading below cash and a shell company in New York announced plans to take it over for the cash. Since then, the company's shares have rebounded. (See BioWorld Today, Nov. 14, 2008.)
Shares in YM Biosciences (AMEX:YMI) were down 5 cents Tuesday, closing at $1.35.