BioWorld International Correspondent

Biovitrum AB completed its second acquisition of the year, agreeing to a cash and share takeover of fellow Swedish firm Arexis AB.

Financial terms were not disclosed, but the transaction includes an up-front payment to Arexis shareholders combined with additional payments tied to the future clinical and commercial progress of the company's programs. The milestone payments constitute the larger part of the consideration, Biovitrum CEO Mats Pettersson told BioWorld International.

The deal gives Stockholm-based Biovitrum a new lead drug candidate, recombinant bile salt stimulated lipase (BSSL), which is in development for treating fat malabsorption in cystic fibrosis patients with pancreatic insufficiency. About 90 percent of cystic fibrosis patients suffer from that condition, which can lead to malnutrition, failure to thrive and mortality. The program, which has European Union orphan drug designation, already has completed a Phase II study and will enter a Phase IIb trial in the second half of 2006, Pettersson said.

The same enzyme, which is produced in the pancreas and is secreted in mother's milk, also is undergoing development as a dietary supplement for treatment of preterm infants. A second program targets a skin protease, stratum coorneum chymotryptic enzyme (SCCE), which is implicated in dermatitis and a rare genetic disease called Netherton's syndrome. Arexis has additional preclinical programs in inflammation and metabolic diseases.

Pettersson said the BSSL program will act as a "precursor" for the development of a sales and marketing effort around proprietary products. Biovitrum already has an emerging sales and marketing team involved in selling in-licensed products in the Nordic region. Biovitrum will retain the existing Arexis R&D group at its base in Gothenburg, as it did with its previous acquisition - Cambridge, UK-based Cambridge Biotechnology Ltd., which it acquired in March. (See BioWorld International, March 23, 2005.)

Arexis, which was founded in 1999, previously had raised about SEK170 million (US$22 million) in private funding. Its founders include Vice President of Medical Operations Vidar Wendel-Hansen; Rikard Holmdahl, of the University of Lund; Holger Luthman, of the Karolinksa Institute in Stockholm; and Leif Andersson, of the Swedish University of Agricultural Science, Uppsala.

Biovitrum disclosed the acquisition less than a week after entering a collaboration with Santhera Pharmaceuticals AG, of Liestal, Switzerland, based on the latter company's series of dipeptidyl peptidase IV (DPP IV) inhibitors for the treatment of metabolic disease. DPP IV is involved in the degradation of glucagon-like peptide 1 and glucose-dependent insulinotropic polypeptide, two incretin hormones that stimulate the secretion of insulin in response to increased plasma glucose levels.

"We believe the target is validated. From a functional or mechanistic point of view, it's a stronger bet than many other targets in diabetes treatment," Pettersson said. While the company is not first or even second in the race to develop DPP IV inhibitors - Novartis AG, of Basel, Switzerland, and Merck & Co. Inc., of Whitehouse Station, N.J., have compounds in Phase III trials - Santhera's chemical series "have very interesting features," Pettersson said.

Biovitrum is paying Santhera an up-front fee of €4 million (US$4.9 million). The companies plan to split revenues according to a fixed percentage. Santhera also could receive up to €50 million in milestones per marketed product. The program is expected to enter the clinic in early 2006.

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