By Lisa Seachrist
On the heels of strong Phase II results and in the midst of a pivotal trial, Biomira Inc. has signed an option agreement to regain all rights held by marketing partner Chiron Corp. to its therapeutic breast cancer vaccine, Theratope.
Under the terms of the arrangement, Edmonton, Alberta-based Biomira will buy back the rights from Emeryville, Calif.-based Chiron. Biomira will be responsible for funding all development of Theratope, which has been split 50-50 since the marketing arrangement was signed in May 1997. (See BioWorld Today, May 6,1997, p. 1.)
The companies decided to end the collaboration as a result of changes in corporate priorities at Chiron. In addition to reacquiring rights to Theratope, Biomira secured a $36 million equity line of credit from Paul Revere Capital, of New York, to aid in developing Theratope.
"Any Chiron watcher realizes there has been an entire change in their executive office since we signed this deal in 1997," said Alex McPherson, CEO and president of Biomira. "When Chiron put into place its new CEO they did a reevaluation of corporate priorities. They identified Theratope as an exciting product but to reduce expenses, they decided to search for another partner."
Because most potential partners preferred to deal with Biomira alone, the companies decided it was in their best interests to deal the rights back to Biomira, McPherson said.
The buy-back was structured as a series of put and call options between Biomira and Chiron that may be modified over time. However, Chiron will receive a cash payment that will be determined based on whether or not Biomira gets another partner.
"We aren't divulging the size of the cash payment, but it's a win-win situation," McPherson said.
With the equity financing Biomira has secured through Paul Revere Capital, McPherson said the company was entertaining thoughts of developing Theratope on its own.
"With the financing we certainly have sufficient funds to take Theratope to the end game," McPherson said.
Under the terms of the financing, which is being supported by a group of European investors, Biomira will have the right to draw down $36 million over the next 30 months in $3 million installments. For each installment, Biomira has the right to set a threshold price below which it is not obligated to sell its stock. The price for each draw-down is based on the average trading price of the company's common shares over a specified period of time.
"This allows us to minimize the amount of stock required to be issued," Edward Taylor, vice president of finance and administration, said.
In addition, the purchaser will receive 100,000 warrants redeemable at 110 percent of the previous five days' weighted trading average. The purchasers may be eligible for additional warrants depending upon the amount of money Biomira ultimately draws down. If the company draws down less than $6 million, an addition 400,000 warrants will be issued. If the company draws down between $6 million and $12 million, 200,000 additional warrants will be issued.
Biomira will register the financing next week with the appropriate regulatory bodies.
Theratope is a vaccine that includes a synthetic antigen that mimics natural Stn, a cancer-associated epitope, the expression of which is associated with disease progression. It is conjugated to a high molecular weight protein carrier, Keyhole Limpet Hemocyanin (KLH). The vaccine stimulates the patient's immune system to attack cells carrying Stn.
Results from Phase II studies of Theratope in patients with metastatic breast cancer showed those who received the vaccine had a median survival of 26.6 months compared with 9.2 months for historically matched controls.
A more potent version of Theratope is currently in a Phase III study of patients with metastatic breast cancer who previously were treated with a number of different chemotherapy regimens including high-dose chemotherapy and bone-marrow transplantation. That trial involves eight centers and up to 950 patients.
As a result of the buy-back of Chiron' rights, Biomira is now responsible for funding this clinical trial.
"We've been very happy with our relationship with Chiron," McPherson said. "It's just in the best interest of both of our companies for us to move on."
Biomira's stock (NASDAQ:BIOM) closed Friday at $3.50, up 12.5 cents.