Alliance Pharmaceutical Corp. transferred assets of its subsidiary, Astral Inc., to adult stem cell company MultiCell Technologies Inc., which in turn created a new unit aimed at developing therapeutics using stem cells.
San Diego-based Alliance is expected to retain one-third ownership of the new company, to be named MultiCell Immunotherapeutics Inc. (MCTI). Through the transfer, MCTI gained Astral's intellectual property relating to chimeric antibody technology, T-cell tolerance, Toll-like receptor technology and immunosuppression. In exchange, Alliance will receive 490,000 shares of MCTI's common stock.
Meanwhile, as MCTI's parent company, MultiCell agreed to take over all obligations relating to business development of Astral, and will receive 510,000 shares of common stock from its new subsidiary. MCTI also is expected to issue MultiCell 500,000 shares of its Series A stock for $2 million, with half of that to be paid at closing and the remainder paid out in four quarterly installments over the next year.
At the conclusion of the Series A financing, Alliance would own about 33 percent of the outstanding capital stock, while MultiCell would hold 67 percent.
Representatives of Alliance could not be reached for comment. Its shares, listed on the Over-the-Counter Bulletin Board (OTCBB:ALLP) rose 2 cents Thursday to close at 16 cents.
With the transfer of its early stage subsidiary, Alliance can focus on its lead product, Oxygent (perflubron emulsion), an intravascular oxygen therapeutic designed to carry oxygen to tissues through the bloodstream in patients undergoing surgical procedures. A product now in late-stage development, Oxygent has had its ups and downs.
Though the product performed well in a Phase III trial involving general surgery patients, a second Phase III study in patients undergoing cardiac surgery was suspended in 2002. A few months later, the company cut about 40 percent of its work force to save money, and in November of 2002, Alliance divested its ultrasound imaging agent, Imagent, and related assets to New Hope, Pa.-based Photogen Technologies Inc. Imagent is approved for imaging of the left ventricle of the heart, and is marketed through the Imcor Pharmaceuticals division of Photogen. (See BioWorld Today, Aug. 30, 2002; Nov. 26, 2002.)
The transfer of Astral's assets should reduce expenditures on the road to Oxygent's potential approval. According to Alliance's latest financial filing, Astral recorded research and development costs of about $1 million for the nine months ending March 31. Over the last 12 years, that subsidiary racked up total costs of $12.1 million.
Alliance recorded a net income of $71,000 for its third quarter. As of March 31, the company had cash and cash equivalents totaling $6.9 million.
Astral initially was formed as a subsidiary of Alliance to focus on technology platforms based on T-cell immunotherapy to create treatments for autoimmune diseases, including Type I diabetes and multiple sclerosis. Under MultiCell, the company will use those platforms in conjunction with MultiCell's experience in regulating stem cell growth and regeneration to develop and commercialize therapeutics for degenerative neurological disease, metabolic and endocrinological disorders and ocular diseases.
Shares of MultiCell (OTCBB:MCET) closed unchanged at 88 cents Thursday.
MCTI will be headed by Stephen Chang, president of MultiCell and former CEO of Astral. Chang will be joined on the company's board by MultiCell CEO Gerald Newmin and Alliance CEO Duane Roth.