ChemGenex Therapeutics Inc. and AGT Biosciences Ltd. are merging to form a genomics-driven pharmaceutical firm with leading-edge technology and two cancer drugs in clinical trials, officials from both companies said.
AGT, of Melbourne, Australia, agreed to issue about 28 million ordinary shares to ChemGenex shareholders. The shares are valued at about A$14 million (US$10.4 million), said Harry Pedersen, ChemGenex's chief business officer and executive vice president of corporate development.
AGT's stock (ASX:AGT) closed Tuesday at A56 cents on the Australian Stock Exchange.
ChemGenex, of Menlo Park, Calif., is a privately held firm. Following the merger, which is expected to close by mid-June, AGT plans to upgrade from the current level 1 to a level 2 American depository receipt Nasdaq program for the combined entity as soon as it's practical, the company said. It's not clear whether the ticker will change to reflect the new firm's name.
The combined firm, with offices in Menlo Park; Geelong, Australia; and San Antonio; will be called ChemGenex Pharmaceuticals and initially will employ 55 to 60 people, a figure expected to grow, Pedersen told BioWorld Today. For ChemGenex, which brings two Phase II drugs to the table, the merger is the perfect marriage of companies on the same wavelength, Pedersen said.
ChemGenex focuses on drug development and applying genomics tools to drug development, while AGT essentially has worked in the discovery arena, operating as a genomics company that discovers and validates targets, and screens programs for its partners, he said. ChemGenex has a healthy cancer program, while AGT brings expertise in diabetes and obesity. As a single firm, ChemGenex Pharmaceuticals also will work in anxiety and depression.
ChemGenex's most advanced candidate, Ceflatonin (homoharringtonine), is in Phase II studies for myelodysplastic syndrome and is expected to enter a Phase II later this year in chronic myelogenous leukemia (CML). The firm hopes to enter a Phase III in CML next year, and also expects to begin studies in acute myeloid leukemia this year.
Homoharringtonine was discovered by the National Cancer Institute in the same program that generated Taxol and irinotecan. ChemGenex developed its own purified formulation of homoharringtonine, which became Ceflatonin. The other candidate, Quinamed (amonafide dihydrochloride), also originated from a NCI program. Quinamed is in Phase I/II studies in solid tumors. Pedersen expects future studies to evaluate the candidate in prostate and breast cancer, and possibly gastric, ovarian and colon cancers. Beyond the lead drugs, ChemGenex has other preclinical compounds at various stages and hopes one will enter the clinic next year.
AGT said it has "significant capabilities" in diabetes and obesity research and has a long-term agreement with the European pharmaceutical company Merck-Sante SAS, of Lyon, France, that already has been worth more that A$38 million. The alliance has generated substantial intellectual property, the company said. AGT also has business units that operate in diagnostics, animal therapeutics, over-the-counter medications and fee-for-service research provisions.
AGT's major shareholders are Charter Pacific Corp. LLC, of Brisbane, Australia, with a 33 percent stake; Merck-Sante with 9.9 percent; and Queensland Investment Corp., also of Brisbane, with 9.1 percent. Global Markets Capital Group LLC, of New York, advised AGT on the merger.
Greg Collier, AGT's CEO, will serve as CEO of the combined company while Dennis Brown, ChemGenex president and CEO, will serve as the new company's president.