West Coast Editor
To boost its cancer efforts with kinase-based drug discovery tools, GPC Biotech AG bought the bankrupt German firm Axxima Pharmaceuticals AG for €13.7 million (about US$18 million) by issuing about 1.3 million new shares at a price of €10.47 each in a cash-neutral transaction.
Martinsried, Germany-based Axxima's assets were transferred to a holding company into which existing and new investors, led by TVM Techno Venture Management in Munich, chipped in another €8.7 million.
Laurie Doyle, associate director of investor relations for GPC, noted the firm is buying assets, not taking on liabilities.
"The assets were put into a holding company, and we purchased the holding company," she said. "We're excited about the technology, but having the cash was important for us," since it allows GPC to cover the expense of hiring Axxima's 40 employees "for probably about 18 months." She declined to speculate whether the company would have done the deal without the cash.
GPC's stock (NASDAQ:GPCB) closed Thursday at $13.25, up 44 cents. The deal was disclosed Wednesday.
As part of the buyout, GPC - with headquarters in Waltham, Mass., and a facility in Munich - is obligated to make up to €9 million in milestone payments to the insolvency receiver of Axxima, related to the advancement of three compounds protected by Axxima's patent estate.
"The nice thing about that is, they have to get into the clinic," Doyle said, and if they get that far, chances are better the maximum €9 million payout will prove worth it. Importantly, she said, the Axxima buyout lets GPC forge ahead with drug development while beefing its discovery capability.
"We do have internal kinase expertise, as well, and what we're getting from Axxima is complementary" to that, she said.
The shares in the transaction will be issued to the investors in the holding company from authorized capital, with the €10.47 price calculated by using the average closing price of GPC Biotech shares for the last 30 trading days, which is an 8.6 percent premium to the March 1 closing price. Dilution resulting from the deal amounts to about 4.6 percent and the shares are subject to a lock-up period of at least six months.
Focused in recent years on early stage kinase inhibitors for cancer, Axxima started operating in 1998. The company, which first targeted infectious diseases, was founded by a group of scientists led by Axel Ullrich, formerly with South San Francisco-based Genentech Inc., who also co-founded Sugen Inc., of Redwood City, Calif., now a unit of Pharmacia Corp. (which is part of New York-based Pfizer Inc.). Axxima raised about $65 million in venture capital during its run.
GPC gets all of Axxima's patents, patent applications and know-how, as well as the cancer drug discovery programs. Early stage programs in infectious disease are in the mix, too, and might be partnered by GPC later.
Meanwhile, GPC's lead candidate, satraplatin, is undergoing Phase III pivotal trials as a second-line chemotherapy treatment in hormone-refractory prostate cancer. In-licensed from Spectrum Pharmaceuticals Inc., of Irvine, Calif., the small-molecule platinum derivative was the subject of a special protocol assessment with the FDA, which has granted fast-track status to the compound.
"We're expecting to complete the [new drug application] filing in the second half of 2006," Doyle said, with patient enrollment expected to be done by the end of this year.
Satraplatin is an oral drug. Combined with radiation therapy, she said, "oral [administration] may really be an enhancer in terms of efficacy, because you can dose daily. We know the platinums enhance radiation therapy, but with an IV you can't do it daily."
Other platinum compounds, she added, didn't show efficacy in a randomized trial.
Originally from London-based Johnson Matthey plc, satraplatin was developed by Bristol-Myers Squibb Co., of New York, starting in 1992 but clinical work was terminated when a new CEO took over in 1999.
"It did not involve a review of the data," Doyle told BioWorld Today. "Satraplatin just didn't fit the new direction BMS was going in the 1990s. At the time, prostate cancer was very different than it was today," she added - and so was the reimbursement picture.
Taxotere (docetaxel), from Paris-based Sanofi-Aventis Group, was approved in May for use in combination with prednisone as a first-line therapy against metastatic, androgen-independent (hormone-refractory) prostate cancer.
That drug "does not cure people," Doyle pointed out. "We're going after second-line where there is an increasing need." Spectrum licensed the compound from Johnson Matthey in 2001, and GPC picked it up from Spectrum the following year.
Last month, GPC published in the peer-reviewed journal Oncology data from a 50-patient randomized Phase III trial evaluating satraplatin as first-line chemotherapy for hormone-refractory prostate cancer. Results showed that satraplatin treatment significantly lengthened progression-free survival (p=0.023). The median time to disease progression or death was 5.2 months for satraplatin vs. 2.5 months for the control arm.
Also in GPC's pipeline are cancer programs that include a Phase I monoclonal antibody with a novel mechanism of action against a variety of lymphoid tumors and a preclinical small-molecule, broad-spectrum cell-cycle inhibitor.