BioWorld International Correspondent

Shares in Affitech A/S skyrocketed Wednesday, following a last-minute infusion of funds by Russian investors, who have taken a majority stake in the Copenhagen, Denmark-based company.

The €20.9 million (US$28 million) investment deal with Trans Nova Investments Ltd., combined with an associated product licensing agreement with NauchTekhStroy Plus (NTS Plus), which is worth up to €23 million more, secures the company's future for the next three to four years, CEO Robert Burns told BioWorld Today. Another €1.6 million in project funding is potentially on offer as well.

As well as securing hard cash, the deal gives the company an opportunity to gain a toehold in one of the pharmaceutical industry's most prominent emerging markets, via an alliance with its biggest domestic player.

NTS Plus is a newly formed joint venture between Moscow-based JSC Pharmstandard, Russia's largest indigenous pharmaceutical firm, which posted almost $800 million in sales last year, and Aleksandr Shuster, a drug discovery entrepreneur.

"We're accessing the cash obviously, but we're also accessing a partner that's able to help up with our clinical development plans," Burns said. NTS Plus will develop and commercialize in Russia and in the Commonwealth of Independent States (CIS) two of Affitech's preclinical portfolio of fully human antibodies. Affitech would receive high single-digit royalties on eventual product sales.

The antibodies include AT001 (also called r84), which targets vascular endothelial growth factor (VEGF) and which could become a competitor to bevacizumab (Avastin), marketed in several oncology indications by the Genentech arm of Basel, Switzerland-based Roche Holding AG. "It's a potential alternative to a very successful but very expensive drug product," Burns said.

The second molecule is AT008, an antibody directed at CCR4, a G-protein coupled receptor (GPCR) found on the surface of cancer cells and cells of the immune system. Each is around 18 months from entering the clinic.

For Affitech, one of the few remaining independent antibody platform players, the deal came at a crucial juncture. The company had been living on borrowed time - and on bridging loans - since the beginning of the year and was due to run out of cash this month. "We had many balls in the air, and we ended up going where the money is," Burns said.

Although Affitech was formed - originally in Oslo, Norway - as far back as 1997, it has so far struggled to develop its own pipeline. "I think that the business model was wrong - extremely wrong - it was a service model really," Burns said. "In a way, I think the company was always undercapitalized."

Burns joined Affitech last September, along with Senior Vice President of R&D Alexander Duncan, to lead a turnaround. "It didn't take long to come up with the plan," he said. It is based on industrializing the company's cell-based antibody selection platform (CBAS), a method for screening for novel antibodies using living cells.

The company is focused in particular on the discovery and development of antibodies targeting GPCRs, the pharmaceutical industry's favorite targets. Burns said there is a particular opportunity in targeting GPCRs that bind multiple ligands.

Financing this plan was the challenge, however. "We were a public company with a preclinical portfolio, and that's tough," Burns said.

For Trans Nova Investments, an investment vehicle backed by Aleksandr Shuster and Pharmstandard Chairman Viktor Kharitonin, the deal is already showing a profit. Its investment in Affitech was priced at DKK0.60 per share (US$0.11), a small premium to Monday's closing price of DKK0.57. The stock (COPENHAGEN:AFFI) traded as high as DKK1.26 Tuesday, before closing at DKK1.05, a gain of 84 percent.

Danish securities rules could require Trans Nova to commence a tender offer for Affitech's outstanding shares, however, as the 53.3 percent stake it has gained through the transaction puts it well above the regulatory threshold of 30 percent. That is not part of the current plan, however, and the two companies expect to seek a dispensation from that requirement from the Danish Financial Supervisory Authority.