BioWorld International Correspondent

LONDON - Vernalis plc is acquiring Ionix Pharmaceuticals Ltd. in an all-share deal that values the privately held ion channel specialist at £12.5 million (US$21.9 million).

The move gives Vernalis access to IX-1003, currently in Phase I for acute post-operative pain, along with two preclinical programs: IX-1004 for chronic pain and IX-1005 for opiate addiction. All three are partnered with Reckitt Benckiser (RB), the household products group, and are based on an intranasal formulation of buprenorphine, which is manufactured and marketed by RB in other delivery formats.

IX-1003 shortly is due to start Phase II trials funded by RB. Vernalis is entitled to milestones and royalties and will have the right to co-promote IX-1003 in the U.S., providing a second product to the sales team it is setting up to market the migraine treatment frovatriptan.

There is evidence of Peter Fellner's hand in the deal. He's chairman of both Vernalis and Ionix, and a prime mover in previous restructuring moves in the UK biotech sector. A former CEO of Celltech Group plc, Fellner was responsible also for bringing together British Biotech plc and Vernalis.

Simon Sturge, CEO of Vernalis, said Ionix is a good strategic fit.

"It adds a clinical program that has the potential to provide a convenient alternative to other opiate analgesics, and it gives Vernalis an additional program with co-promotion rights for our emerging sales and marketing infrastructure in the U.S."

Vernalis is issuing about 19.7 million shares, representing 9 percent of the enlarged share capital. Ionix shareholders, who have invested £24 million in the business, also are promised £5 million in cash on receipt of the first marketing authorization for IX-1003.

Shares of Vernalis were unchanged at 63.5 pence after the deal was announced July 6.

Before the transaction is completed at the end of July, all but six of Ionix's employees will be made redundant and its facility at the Cambridge Science Park closed. The company reported a loss of £7.7 million last year, and the net assets to be acquired by Vernalis following the restructuring will be worth around £900,000.

Ionix was founded in July 2001 around the research of John Wood, a specialist in the peripheral nervous system at University College London, and raised £8 million in its first funding round.

Vernalis said it will continue to investigate Ionix's two ion channel programs, which are in lead optimization. The Reading, UK-based company has a busy six months ahead, with plans to start Phase II trials of V10153 in acute ischemic stroke, IX-1003 in acute post-operative pain and V2006 in Parkinson's disease.

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