Gaining full rights to a product it has developed since 2000, Guilford Pharmaceuticals Inc. entered a definitive agreement to acquire ProQuest Pharmaceuticals Inc. for $7 million in common stock.

Guilford will obtain full ownership of the worldwide intellectual property rights to Aquavan injection, a sedative that moved - in only four years - from the preclinical stage to Phase III development.

The companies first encountered each other in March 2000, when they signed a technology license agreement in which Guilford obtained worldwide development and commercialization rights for Aquavan in exchange for up-front equity payments to ProQuest, as well as future milestone and royalty payments.

By acquiring ProQuest, Guilford no longer will be responsible for making those milestone and royalty payments.

"It affords us the opportunity for greater downstream revenue," said Stacey Jurchison, director of corporate communications for Baltimore-based Guilford. "The acquisition of ProQuest at this time supersedes that arrangement and now gives Guilford full ownership of Aquavan without further obligation."

Under the agreement, the shareholders of Lawrence, Kan.-based ProQuest will receive about 1.5 million shares of Guilford stock - or about $7 million worth - based on the average closing price of the stock for a 30-day period. The transaction involves only the intellectual property and not ProQuest's staff and facilities. It is expected to close later this month and should qualify as a tax-free reorganization. Guilford's stock (NASDAQ:GLFD) rose 2 cents on Thursday to close at $5.55.

Guilford intends to seek approval for Aquavan for procedural sedation in brief diagnostic and therapeutic procedures. The product is in three Phase III studies, one looking at Aquavan during colonoscopy, another during bronchoscopy and the third during minor surgical procedures. Guilford plans to start a fourth study in the coming months testing Aquavan during cardiac procedures.

"We're anticipating completing each of these studies by the end of next year," Jurchison said. "And then, our goal is to submit a [new drug application] for Aquavan in the first half of 2006."

In the U.S., there are more than 50 million such procedures requiring sedation each year. Currently, a product called Midazolam is used for procedural sedation. While Guilford has not done a direct comparison study between that product and Aquavan, the company has compared data from each product's trials.

"We believe that Aquavan will have a faster time to onset and also provide a faster recovery to sedation," Jurchison told BioWorld Today. "Another advantage is patients wake up, not only more quickly, but clear-headed, ready to return to their activities of daily living."

Aquavan injection is a water-soluble prodrug of propofol. It is rapidly converted by the enzyme alkaline phosphatase into propofol after intravenous injection.

Aside from developing Aquavan, Guilford is focused on GPI 1485, which is in Phase II development for Parkinson's disease and peripheral nerve injury. The company markets two products: Gliadel Wafer to treat certain types of brain tumor in combination with radiation and surgery, and Aggrastat Injection to treat acute coronary syndrome.

In preclinical testing, Guilford is studying N-acetylated-alpha-linked acid-dipeptidase inhibitors in neuropathic pain, prostate cancer, drug addiction and traumatic brain and spinal cord injury, as well as poly (ADP-ribose) polymerase inhibitors for cancer chemosensitization and radiosensitization.

In the summer, Guilford raised $45 million in a public offering to help advance the clinical trials of Aquavan and other products. (See BioWorld Today, July 2, 2004.)

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