BioWorld International Correspondent

LONDON - Another UK biotech bit the dust as Hunter-Fleming Ltd. was acquired by Newron Pharmaceuticals SpA in an all share transaction, after trying for a year, and failing, to raise fresh capital on its own account.

The deal sees Milan, Italy-based Newron paying €8 million in newly issued shares (US$11.6 million) now, with a further €17 million to come in the form of more Newron shares, dependent on reaching one of several inflection points in the development of the three-strong clinical portfolio, or of a fourth preclinical product in which Hunter-Fleming owns a 17 percent stake.

"We tried to do a listing on AIM [Alternative Investment Market, London] at the beginning of 2007, but the brokers said it's not on - we couldn't get a return for the shareholders. So we were forced to try and raise further private equity," Mike Capaldi, Hunter-Fleming CEO told BioWorld International.

Capaldi, who spent most of 2007 trying to source new capital, said the all-paper sale to Newron is, "the best outcome for our shareholders, given the state of the market." He noted that Newron has relevant expertise, is well-funded until 2010 and is committed to taking Hunter-Fleming's compounds forward. There will be integration, but Hunter-Fleming, which operates on a virtual model, will continue to be based in Bristol, UK.

"Putting the two companies together makes sense. It's a good fit, and our shareholders share the benefit of Newron's compounds," said Capaldi.

"We are not acquiring the company just for its assets, but also the expertise of the people," Luca Benatti, Newron CEO, told BioWorld International. The company has 13 employees but has no research facilities of its own.

Hunter-Fleming was founded in 1999 to develop treatments for inflammatory neurodegenerative diseases. The initial seed capital came from the founders. In 2000, it acquired Bristol University spinout Aegis and raised more money in 2001 from family and friends, and a corporate investor, Toyama Chemical Co., of Tokyo.

Since then Hunter-Fleming has raised $30 million in two rounds. At the time of the second $13 million round in March 2006, the company took a 17 percent stake in Trident Pharmaceuticals Inc., of Boston. The company, which is majority owned by Advent International and Omega Fund Management, was formed to fast track development of HF1020, an asthma treatment. The compound is due to enter clinical trials in 2008.

The in-house portfolio consists of HF0220, a naturally occurring human steroid, which is in Phase IIa in Alzheimer's disease, and is relevant to the treatment of rheumatoid arthritis; HF0420, a low molecular weight oligosaccharide for neuronal repair and neural protection in Phase I; and HF0299, a steroid for treating neuropathic pain, which has completed Phase I.

Hunter-Fleming's shareholders will get the further €17 million tranche of shares on completion of either a licensing deal for HF0220 in Alzheimer's disease, or achieving clinical proof of concept in that indication, or if Trident gets clinical proof of concept for HF1020 and completes a trade sale of the company.