BioWorld International Correspondent

Elbion AG merged with 4AZA NV in an all-share deal that will combine two privately held companies with a focus on immunology drug discovery and development.

Financial terms were not disclosed, but Elbion spokeswoman Ann De Beuckelaer confirmed that Elbion shareholders have a majority position in the enlarged entity. Its management team, including CEO Bernd Kastler, Chief Financial Officer Thomas Taapken and Chief Scientific Officer Thomas Kronbach, will take charge of the merged organization, which is called Elbion NV. 4AZA's former CEO Mark de Boer will work with Elbion on a consultancy basis.

The management trio will relocate to 4AZA's headquarters in Louvain, Belgium, as that offers a better base for international expansion than Elbion's current location in Radebeul, near Dresden in eastern Germany, close to the Polish border. The latter will continue to be Elbion's main drug discovery and development site. Louvain will host corporate and business development functions, as well as immunology research. Staff at each site will be retained, De Beuckelaer said.

Elbion is by far the bigger of the two firms. Established in 2002 as a spinout from the Dusseldorf-based chemicals giant Degussa AG, the company raised €35 million (US $46.6 million) in venture capital financing in 2005 and had about 70 employees prior to the merger. Its roots lie in AWD Pharma, a firm with a 100-year history that Degussa acquired following the reunification of Germany in 1989.

4AZA, whose scientific founders include Mark Waer and Piet Herdewijn, of the Catholic University of Louvain in Belgium, and Wolfgang Pfleiderer, of the University of Konstanz in Germany, had 15 employees and had raised €7 million since its foundation in 2002.

Last year, it entered an agreement with Foster City, Calif.-based Gilead Sciences Inc. to identify and develop small-molecule drugs for treating hepatitis C virus infection.

"That's currently at the preclinical stage," De Beuckelaer said.

Elbion's lead drug candidate, a phosphodiesterase 4 inhibitor called AWD-12-281 in development for atopic dermatitis, is partnered with London-based GlaxoSmithKline plc. A second drug candidate, ELB245, is entering a Phase II trial next year in overactive bladder. ELB353 and ELB526, in development for chronic inflammatory and topical inflammatory conditions, respectively, are due to enter the clinic next year as well.

Elbion NV has no immediate plans for raising extra cash. "We're on solid ground in financial terms," De Beuckelaer said.