West Coast Editor
Cephalon Inc. topped off a spate of mixed news with disclosure of its plan to buy Salmedix Inc. for about $160 million in cash, adding to the cancer drug pipeline while taking on $40 million in potential milestone payments related to Treanda, Salmedix's Phase II candidate for slowly progressing non-Hodgkin's lymphoma.
San Diego-based Salmedix, which filed for an $86.25 million initial public offering at the end of April, would have about $25 million in cash after the transaction, net of expenses.
"If you look at the market, valuations for IPOs have been very low for companies in Phase II," said Anita Busquets, chief financial and administrative officer for Salmedix.
The milestone payments would come in the form of $15 million upon the FDA's acceptance of the new drug application for Treanda, and $25 million when the drug is approved, she said.
Expected to close in the second quarter of this year, the deal would make Salmedix a wholly owned subsidiary of Frazer, Pa.-based Cephalon. Personnel at Salmedix "will eventually integrate into [Cephalon's] facility," Busquets told BioWorld Today. "There will be layoffs, but we don't know how many."
Cephalon estimated the transaction will be dilutive to its earnings at about 10 cents to 15 cents per share, and will have more exact figures when the deal is done. The company's stock (NASDAQ:CEPH) closed Friday at $44.13, down $1.
Treanda (bendamustine hydrochloride), a nucleoside analogue with alkylating properties, is being evaluated in Phase II as a single agent in patients with NHL who are refractory to South San Francisco-based Genentech Inc.'s Rituxan (rituximab). A second study is testing Treanda in combination with Rituxan for patients who are sensitive to the latter compound.
"If we're on plan, the first Phase III would start this year," Busquets said.
Interim results from both Phase II trials were expected at the American Society of Clinical Oncology meeting over the weekend, but others already have published much data on bendamustine hydrochloride, which is marketed in Germany by a third party for NHL, chronic lymphocytic leukemia, multiple myeloma, metastatic breast cancer and other solid tumors.
"It was developed in East Germany and after reunification was grandfathered in," Busquets said. "It's an older drug, and we were very fortunate to have found it before a lot of the data became available in Germany."
Salmedix licensed the compound from Fujisawa Deutschland GmbH, of Munich, Germany, in May 2003, which already is sponsoring some Phase III trials overseas, she said. Along with Treanda, Cephalon stands to gain a pair of other Phase II cancer drugs.
SDX 101, "the drug we started the company around," is being tested against chronic lymphocytic leukemia, Busquets said. The compound is an isomer of the marketed anti-inflammatory drug Lodine from Madison, N.J.-based Wyeth.
The National Cancer Institute is studying SDX 102, an intravenous small molecule, for brain tumors. Salmedix is using its assay to select patients for other Phase II trials in non-small-cell lung cancer, pancreatic cancer, sarcoma and mesothelioma.
Cephalon, in other news this week, stopped a late-stage study of CEP-1347 in Parkinson's disease after interim results revealed a lack of clinical benefit, but said the partnership with Copenhagen, Denmark-based H. Lundbeck A/S would continue. The firm also reported positive results with Oravescent fentanyl for breakthrough cancer pain. (See BioWorld Today, May 6, 2005, and May 13, 2005.)