Assistant Managing Editor

Finnish biotech firm Biotie Therapies Corp. and German firm Elbion GmbH agreed to combine their pipelines and resources in an all-stock transaction that Biotie CEO Timo Veromaa said would create a "European leader in the CNS and inflammatory markets."

Under the terms, Biotie, of Turku, Finland, will issue 46.8 million new shares to Elbion and would own about two-thirds of the company. In addition, certain shareholders of Elbion - Burrill & Co., TVM Capital and AGF Private Equity - said they would make a €3.3 million (US$4.2 million) investment into the combined company.

At closing, which is expected following shareholders meetings next month, the new firm would have about €27 million, putting the company in a strong cash position "from a European perspective," Veromaa told investors during a conference call.

The deal also brings together two pipelines that "will really create a strong and balanced portfolio," he added. "We believe that we will be able to deliver multiple value inflection points within the next 12 to 24 months."

Biotie brings to the table its Phase III-stage opioid receptor antagonist nalmefene for alcohol dependence, which is partnered in a potential €82 million deal with Copenhagen, Denmark-based H. Lundbeck A/S. Under the terms of that agreement, Lundbeck is responsible for handling all Phase III work.

Behind nalmefene, Biotie has BTT-1023, a fully human monoclonal antibody targeting VAP-1 (vascular adhesion protein-1), a target with dual functions in inflammation. That product, which was partnered with Basel, Switzerland-based F. Hoffman-La Roche Ltd. in 2006, has completed a first-in-man trial and is expected to start repeat-dosing studies "in the near future," Veromaa said.

Elbion, which was founded in Radebeul, Germany, in 2004 through a management buyout from German industrial group Degussa AG, adds early clinical and preclinical programs to the merger, including its most advanced product, ELB353. That program, a phosphodiesterase 4 (PDE4) inhibitor, is in development for inflammatory conditions such as chronic obstructive pulmonary disease.

ELB353 has completed Phase I testing, with an "excellent side-effect profile," Veromaa said. The combined company expects to take the drug into Phase II soon.

Earlier in its pipeline, Elbion has a preclinical program investigating PDE10 inhibitors in schizophrenia and bipolar disorder, and that program is partnered with Madison, N.J.-based Wyeth in a potential $110 million deal.

To date, close to $10 million has been paid to Elbion from Wyeth, Veromaa said.

Another preclinical program, buprenorphine depot, targets opioid dependence, which is a nice fit with Biotie's lead program, nalmefene, he added.

Following the merger, Elbion will become a wholly owned subsidiary of Biotie and will be helmed by Veromaa as CEO. Thomas Taapken, who currently serves as Elbion's chief financial officer, would take on the CFO position in the new company. Thomas Kronbach, chief scientific officer at Elbion, will serve in that same position for the merged company, while Antero Kallio, vice president of drug development at Biotie, will be appointed chief medical officer.

The combined firm will continue to operate out of the facilities in Finland and Germany.

Pacgen, Medigen in Merger Deal

Pacgen Biopharmaceuticals Corp., of Vancouver, British Columbia, agreed to acquire all the outstanding shares of Taipei, Taiwan-based Medigen Biotechnology Corp. in a reverse merger deal that would give Medigen shareholders a majority interest in the combined company.

The companies signed a letter of intent, under which it is expected that each issued and outstanding share of Medigen would be exchanged for 2.8 common shares of Pacgen issued from treasury. Upon entering a definitive agreement, Pacgen and Medigen would apply to list the firm's common shares on the TSX Group exchange.

The combined company's pipeline would include Pacgen's PAC-113, an antifungal for oral candidiasis, and PAC-G31P, a peptide therapeutic in development for inflammatory diseases characterized by nonbeneficial neutrophil, as well as drugs stemming from Medigen's New Drug Development and Nucleic Acid Testing platforms. Medigen's lead product, PI-88, is a Phase II-stage liver cancer drug.

Pacgen Chairman Chung-Yu Wang said in a press release that his firm had been evaluating strategic options and concluded that the Medigen deal is "the best opportunity available" to maximize shareholder value. The transaction is set to close in February 2009.

Pacgen's President and CEO Duffy DuFresne is expected to leave the company, but he will be retained as a consultant to Pacgen.

Vaxine Makes Bid for Protein Sciences

Australian firm Vaxine Pty Ltd. made a play for Protein Sciences Corp., offering an unsolicited bid to acquire the privately held Meriden, Conn.-based company.

Terms of the offer, characterized as a stock-for-stock deal and assumption of liabilities, were not disclosed, though Adelaide, Australia-based Vaxine said the total value of the deal could exceed $60 million.

Vaxine, which is developing therapeutic and prophylactic vaccines in infectious diseases, allergy, autoimmune diseases and cancer, has three vaccines in clinical studies, plus several in late preclinical development. Chairman Nikolai Petrovsky said the firm has been "following Protein Sciences for some time and are impressed with its vaccine products."

Protein Sciences' pipeline includes FluBlok, a recombinant, cell-based seasonal influenza vaccine under FDA review, as well as a recombinant neuraminidase product aimed at enhancing influenza vaccines and a vaccine to treat severe acute respiratory syndrome.

Favrille Goes Way of Reverse Merger

Five months after its cancer vaccine Specifid missed the mark in a pivotal non-Hodgkin's lymphoma study, San Diego-based Favrille Inc. signed a deal to merge with MyMedicalRecords.com Inc., a company that offers web-based storage for medical information.

Under the terms of the reverse merger, Favrille would acquire all the capital stock of privately held MMR, with existing holders of MMR owning about 64 percent of the new company.

Existing equity holders of Favrille would own about 29 percent, and about 7 percent of the equity would be newly issued to certain creditors as settlement for a portion of the outstanding debt obligations.

Favrille had been seeking strategic options since May, when disappointing Specifid news sent the stock plunging nearly 90 percent and prompted the firm to cut 132 of its 144 employees. (See BioWorld Today, May 28, 2008, and May 30, 2008.)

Shares of Favrille, which were transferred to the Over-the-Counter Bulletin Board (OTC BB:FVRL), fared well Friday, gaining 2 cents, or 100 percent, to close at 4 cents.