West Coast Editor
To get money for its early trials with an HIV vaccine, GeoVax Inc. is merging with Dauphin Technology Inc., an Illinois firm formerly focused on hand-held mobile computers that went bankrupt in 1995.
"The deal is predicated on $13 million coming into GeoVax," said Donald Hildebrand, CEO of Atlanta-based GeoVax, who will hold that position in the new company.
"It's pretty hard to quantify [the deal otherwise]," he said. "I think the market will seek its own level as we go forward."
Under the terms, Dauphin's wholly owned subsidiary, GeoVax Acquisition Corp., will merge with GeoVax, which will survive as a wholly owned subsidiary of Dauphin. Dauphin then will change its name to GeoVax Labs Inc. and will have its headquarters in Atlanta.
Current shareholders of privately held GeoVax and Dauphin, which trades on the Pink Sheets market, will own about 67 percent and about 33 percent, respectively, of GeoVax Labs' outstanding stock (leaving current shareholders of Dauphin with the same number of shares they have now).
GeoVax Labs will issue about 490.3 million shares to GeoVax shareholders, and GeoVax Labs will have about 733.3 million shares outstanding afterward. Dauphin's stock (Pink Sheets:DNTK) closed Wednesday at 76 cents, down 11 cents, or 12.6 percent.
Atlanta's Emory University, which now owns about 48 percent of GeoVax, would become the largest shareholder of the new company, owning about 31 percent.
The deal, which awaits shareholder approval on both sides, gives GeoVax "a few years" of operating capital, and is meant to advance as quickly as possible GeoVax's HIV vaccine, which deploys a two-part approach that is designed to prime the body to recognize HIV, should it appear, and then boost T cells and antibodies to fight the virus.
Specifically, the approach involves delivery by intramuscular injection of a DNA prime expressing multiple proteins from the HIV virus, followed by a booster vaccination using a recombinant poxvirus, also expressing multiple HIV proteins.
Vaccines using purified DNA have been used safely in more than 1,000 humans, GeoVax noted, and the second part of the drug, the MVA boost, consists of an attenuated version of smallpox vaccine, the parent version of which has been given safely to more than 120,000 humans. MVA is a modified version of vaccinia virus, unable to reproduce in human cells.
In 2004, the HIV Vaccine Trials Network, sponsored by the National Institutes of Health in Bethesda, Md., completed a Phase I study at three U.S. sites with good safety results, and the HVTN plans to move ahead with Phase Ia and Phase Ib trials in the second quarter, pending FDA clearance.
Founded in 2001, GeoVax, with 10 employees, has gained more than $5 million in private equity financing, and its HIV vaccine programs have garnered more than $21 million in competitive research grants provided by the NIH to Harriet Robinson (who started the company with Hildebrand) at the Emory University Vaccine Center.
The AIDS vaccine platforms licensed by GeoVax from Emory University include technologies developed by the NIH and the U.S. Centers for Disease Control and Prevention. GeoVax has rights to five issued patents, four recently approved patents and 12 filed patent applications. (See BioWorld Today, Nov. 6, 2002.)
"We have a vaccine that really gives the best protection of any of the candidates out there, by far the best protection," Robinson told BioWorld Today.
She conceded that entities such as the NIH's Vaccine Research Center and Merck & Co. Inc., of Whitehouse Station, N.J., among others, are working on HIV vaccines, "but they don't use the same vectors" as GeoVax.
Merck and the VRC are using the adenovirus.
"Those have smaller cargo capacities, so they use multiple vectors to express several proteins, and 40 percent of Americans have immunity to the adenovirus," she said - a number that's even higher in the developing world.
GeoVax's product "will have [the problem of] pre-existing immunity for people immunized to smallpox," but this wouldn't be a concern for people about age 40 or younger, Robinson noted.
GeoVax's drug protected 22 out of 23 vaccinated monkeys for more than three and a half years, while five out of six of the others died in the first eight months, and CEO Hildebrand said he was "reasonably confident" those results will translate to humans.
In the Phase Ia/Ib trials, to be conducted by HVTN, GeoVax will "run assays in parallel with [HVTN researchers] in real time," Robinson said, so data will be available as the trials continue, with full results expected after about one year.
The trials will start with 40 patients and will add either 60 more or 90 more - the number has not been decided, she said.
How long until a drug might be on the market?
Hildebrand said that, "with all of the work that's been done to date, well in excess of nine or 10 [years' worth], we probably have another five to seven to go," and Robinson echoed the estimate.
"I think it'll be 2012 at the earliest," she said.
Dauphin, for its part, started in 1998, went public in 1991, and met "severe financial problems" in 1993 and 1994, before going bankrupt in early 1995, according to paperwork filed with the SEC.
After the bankruptcy, the firm continued operations, mainly designing and marketing mobile hand-held computers and set-top boxes (which allow televisions to be used as Internet user interfaces), at one point employing more than 125 people. But that didn't work out either, and Dauphin shut down in late 2003.
The company now has one employee, its CEO Andrew Kandalepas, who is expected to become one of seven directors of GeoVax Labs.
Robinson said the most difficult part of developing an HIV vaccine is "moving the whole show down the road," even after funding is gained through creative means such as the Dauphin deal, but she plans to stay the course.
"I'm devoting my life to it," she said.