A year after raising $27 million in its Series A round, Cellective Therapeutics Inc. is being acquired by its larger neighbor, MedImmune Inc.
The move might be somewhat of a surprise, since privately held Cellective wasn't seeking a merger or acquisition and wasn't in need of additional financing, said Arthur Mandell, Cellective's CEO. But, he said, "MedImmune was able to recognize the value of what we were doing, and approached us."
Though specific financial terms were not disclosed, MedImmune agreed to purchase all outstanding common stock, pay a "sizable" up-front fee, and provide certain Cellective shareholders milestone payments based on product development and sales, Mandell said.
In exchange, MedImmune gains three preclinical monoclonal antibodies that target B-cell antigens to develop for a range of cancers and autoimmune diseases.
The companies, both headquartered in Gaithersburg, Md., were hardly strangers prior to the deal. MedImmune's venture capital arm was one of the investors in Cellective's first financing round, and MedImmune's founder and chairman, Wayne Hockmeyer, sat on the smaller company's board.
Calling MedImmune an "ideal strategic partner," Mandell said the agreement puts Cellective's antibodies in the hands of a company with 2,000 employees and one that already is working on a B-cell program.
"It's a larger company, with a larger research base and more resources," he told BioWorld Today. "And it's able to utilize its own in-house capabilities rather than contracting out [clinical] work."
Cellective, which was founded in mid-2003 on technology licensed from the Dana-Farber Cancer Institute and Duke University, has focused its efforts on B cells, a class of cells in the immune system believed to be targets for treating diseases such as B-cell lymphoma, multiple myeloma, rheumatoid arthritis and lupus. The company completed an undisclosed seed round before raising $27.5 million in its Series A. (See BioWorld Today, Sept. 30, 2004.)
Its three preclinical programs target three B-cell antigens: CD19, CD20 and CD22. All are B-cell lineage-specific molecules involved in immune regulation, and early preclinical studies suggest that they block activities associated with tumors and autoimmune disorders.
For MedImmune, the acquisition helps the pipeline and provides "a strong fit with our existing antibody research," said Jamie Lacey, director of public relations for MedImmune.
The company will begin integrating the new preclinical programs into its research and development plan, and reviewing data to determine how and when to start pushing the programs toward the clinic, she said.
None of Cellective's five employees will be joining MedImmune's staff, though all will be granted severance packages comparable with other companies of that size, Lacey said.
The transaction, expected to close by the end of October, is anticipated to cost MedImmune a one-time charge that will cut into its estimated 2005 earnings by about 20 cents per share. The company now projects earnings per share for the year to fall between 4 cents and 10 cents.
During the past month, MedImmune has focused much of its efforts on expanding its pipeline and plans for long-term growth. The company has signed a licensing deal with London-based GlaxoSmithKline plc for several anti-staphylococcal monoclonal antibodies, including a Phase II compound for the prevention of serious bloodstream infections in low-birth-weight infants. Under the terms of that deal, MedImmune is paying an up-front fee plus potential milestones and royalties. Earlier this month, the company entered a collaboration with VasGene Therapeutics Inc., of Los Angeles, to develop monoclonal antibodies for cancer. (See BioWorld Today, Aug. 30, 2005.)
The company expects to increase earnings in the future by buying back all U.S. marketing rights for its respiratory syncytial virus drug, Synagis (palivizumab), from co-promoter Abbott Laboratories, of Abbott Park, Ill., starting after June. (See BioWorld Today, Sept. 1, 2005.)
The company posted a net loss of $44 million, or 18 cents per share, for the second quarter. As of June 30, it had cash and marketable securities of about $1.8 billion.
Shares of MedImmune (NASDAQ:MEDI) closed at $29.07 Wednesday, down 19 cents.