West Coast Editor

Caprion Pharmaceuticals Inc.'s previously disclosed takeover of Ecopia Biosciences Inc. turned sweeter with subscription commitments from investors that puts gross proceeds at the upper end of the deal's projected range of C$30 million (US$25.6 million) to C$45 million.

"We had an order book that just kept growing," said Lloyd Segal, Caprion's president and CEO, who will hold the CEO position with the new firm as well. Pierre Falardeau, president and CEO of Ecopia, will serve as chief operating officer.

The $45 million is coming as payment for 180 million units of the new company, to be known as Thallion Pharmaceuticals Inc., issued at a price of C25 cents per unit. Each unit will consist of a share of the amalgamated firm plus one-half share purchase warrant, and each whole warrant gives the holder the right to buy one share of the new firm for about C37 cents, for a period of 36 months after issuance.

After the units are issued and the private placement is done, shares of the new company will be put together as one post-consolidation share for every 10 pre-consolidation shares.

The deal, first disclosed earlier this year, gives Thallion cash to push all three of its product candidates - two for cancer and one against the E. coli bug. Shareholders of privately held Caprion will get about 69.8 million common shares of the combined company, which is about half the stock outstanding after the closing of the merger. (See BioWorld Today, Jan. 5, 2007.)

Other than the private placement, terms of the deal are exactly the same, Segal said. Ecopia's stock (TSE:EIA) closed Tuesday at C37 cents, down 2 cents.

Outstanding and unexercised options and warrants to acquire shares of Ecopia will be exchanged on closing for options and warrants to acquire common shares of the new firm, and all of Caprion's outstanding and unexercised options and warrants will be cancelled, except for certain warrants held by a third party, which will be exchanged for warrants to purchase 5.3 million shares at C37 and a half cents for a specified period.

Last month, Picchio Pharma Inc., a joint venture health care investment firm owned by FMRC Family Trust, and Power Technology Investment Corp. (a subsidiary of Power Corporation of Canada), had placed a lead order of C$4 million in the financing.

"In the long run, it's possible [the new money] could allow us to accelerate things, in terms of numbers of trials we can run in parallel," Segal said.

Montreal-based Ecopia has the Phase I/II-stage ECO-4601, inhibitor of the RAS-mitogen-activated protein kinase pathway, for various chemotherapy-refractory tumors. The drug works similarly to XL518, which became the subject of a $40 million deal between Exelixis Inc. and Genentech Inc., both of South San Francisco. (See BioWorld Today, Jan. 4, 2007.)

ECO-4601, however, works earlier in the pathway, and whether that's a benefit remains to be seen. "Our drug's activity hasn't been sufficiently well characterized to completely answer that," Segal said, but noted that the popular pathway itself is "very well inside the comfort zone of commercial and academic researchers."

Caprion, also of Montreal, brings to the table CAP-232, a cyclic peptide that acts on the glycolytic pathway in tumor cells, which has finished Phase II trials for metastatic melanoma and is expected to enter the clinic this year for pancreatic cancer. Shigamabs, Caprion's dual antibody for Shigatoxin-producing E. coli infections, is designed to work against strains including O157:H7, implicated in the recent spinach outbreak. Awarded fast-track status by the FDA, Shigamabs is expected to move into a pivotal trial this year.

"It's a recent phenomenon that Shigatoxins mutated into E. coli itself," Segal said, adding that O157:H7 has been identified as the most lethal strain, but "like any mutation, that could change next year."

The $45 million means Thallion "can at least start substantial work on all three [compounds]," Segal said. Shigamabs leads the pack, and the company hopes to get the other two compounds "to a stage where we can either justify raising more money at a much higher price or partner them or both," he said.

The merged company's name does not mean anything in particular, and emerged from brainstorming by officials. "We wanted something that had a dot-com domain available," Segal said.