BioWorld International Correspondent

Pharmexa A/S stands to gain a late-stage clinical asset - a peptide cancer vaccine targeting the telomerase enzyme - for an initial outlay of just 1.4 million in shares, if shareholders agree to its proposed acquisition of Norwegian biotechnology firm GemVax AS.

Based on its share price of DKK28.30 at last week's close, that amounts to just less than DKK40 million (US$7 million). Pharmexa, of H rsholm, Denmark, also would pay an additional tranche of shares worth DKK33 million should the vaccine, GV1001, enter a Phase III trial before September 2006. The trial is expected to start within the next six months.

Pharmexa also is planning to raise DKK150 million to DKK320 million in a rights issue, which also would require shareholder approval. Both proposals will be voted on at the company's annual general meeting on April 29.

"We are not going to acquire this company if we cannot raise an adequate amount of money to add value to their programs. That goes without saying," said Pharmexa CEO Jakob Schmidt.

The so-called TeloVax Phase III study, which would recruit 750 pancreatic cancer patients, would be managed by the UK's National Cancer Research Institute in London and would largely be funded by the charity Cancer Research UK, also of London, although that remains subject to final approval.

"We will get essentially this trial for free," Schmidt said. Pharmexa plans to initiate a second Phase III trial of GV1001 in Scandinavia, called the PrimoVax study, which would recruit another 400 to 500 pancreatic patients.

In the TeloVax study, patients would be assigned to one of three treatment arms, in which they would receive either gemcitabine, gemcitabine for six weeks followed by GV1001, or gemcitabine plus GV1001 simultaneously. The PrimoVax study will compare treatment with gemcitabine with GV1001. The vaccine in each study will be administered along with the adjuvant GM-CSF.

The PrimoVax protocol represents a continuation of a Phase I/II trial Oslo-based GemVax previously conducted in 48 patients, of whom 38 were evaluable. That demonstrated a statistically significant improvement in median survival time in the medium and high-dose groups receiving GV1001 vs. patients on gemcitabine. In total, some 300 subjects have received GV1001 and other, earlier-stage peptide vaccines, and there have been no safety issues associated with the technology.

"It is very unusual to find a small biotechnology company with this amount of clinical validation," Schmidt said. GemVax, spun out of the Norwegian industrial conglomerate Hydro ASA (then Norsk Hydro) in 2001, had sought but failed to raise financing. (See BioWorld International, Nov. 27, 2002.)

"From a scientific standpoint, we find it very exciting because they bring with them freedom to operate against some very interesting targets, including the telomerase enzyme," said Pharmexa Chief Operating Officer Dana Leach. The latter is overexpressed in many cancer cells and has been touted as a possible target for a universal cancer vaccine.

Pharmexa's shares fell slightly Tuesday, but then ended the day on the Copenhagen Stock Exchange at DKK28.10, up from Monday's close of DKK28.

"Right now there is an uncertainty about what the dilution effect [of the rights issue] will be," said analyst Annette Rye Larsen at HSH Gudme in Copenhagen. Moreover, she said, immunotherapy remains a new area and there still are uncertainties about the evidence regulators will require before approval.

"We still need to see the first product on the market," she told BioWorld International.

Schmidt dismissed speculation that Pharmexa would partner its AutoVac Her-2 protein breast cancer vaccine project with GlaxoSmithKline plc, of London, which has an option until the end of this month to enter nonbinding discussions. The company first wants to complete an ongoing Phase II study before entering negotiations with any partners.

"Making a deal on this product right now is probably the worst possible time," Schmidt said.