National Editor

The widely recognized link between Alzheimer's disease and oxidative brain stress turned into a synapse-like connection made by Axonyx Inc. with OXIS International Inc., as the former entered agreements to buy about 52.9 percent of the latter's outstanding voting stock to become the majority shareholder.

"This was sort of a stealth acquisition," said Colin Neill, chief financial officer of New York-based Axonyx, noting that the company wasn't sure how OXIS might react, so deals were made "with a number of shareholders that we knew."

Marvin Housman, chairman and CEO of Axonyx, already owns OXIS shares, so the purchases effectively will give Axonyx 57.3 percent of OXIS, although Housman "did not tender his shares," Neill said. "We suggested he not do that."

The total value of the deal is about $8.1 million, Neill said. "That's what I'll book the transaction at," he told BioWorld Today. "Obviously our price has gone up since [the deals were made]."

Axonyx's stock (NASDAQ:AXYX) fell 9 cents Tuesday to close at $6.40. OXIS (OTC BB:OXIS) moved up 1 cent to close at 80 cents. The about 8.6 percent exchange ratio in the deal was based on a 10-day historical average of the closing prices for the stock of Axonyx ($5.06) and OXIS (58 cents).

Under the terms, Axonyx will acquire about 14 million shares of OXIS stock, in consideration for its issuance of about 1.6 million shares of unregistered Axonyx common stock, which the company has agreed to register soon. Axonyx said it has no immediate plans to buy the rest of the OXIS shares.

OXIS, of Portland, Ore., is a maker and supplier of oxidative stress biologic markers, which have potential for use in diagnosing patients with Alzheimer's, as well as monitoring therapeutic response, and helping to understand how the disease develops.

Axonyx's lead product is Phenserine, a dual-action acetylcholinesterase and beta-amyloid precursor protein inhibitor that was licensed from Bethesda, Md.-based National Institutes of Health's National Institute of Aging. The product is in a Phase III study in Europe evaluating two doses. A Phase IIb study is ongoing to evaluate the drug's ability to lower the levels of the beta-amyloid precursor protein and beta-amyloid in the plasma and cerebrospinal fluid in mild to moderate patients. (See BioWorld Today, June 27, 2003.)

Last month, the company said it will broaden the Phase IIb trial and include a sub-study that will use brain scans of Alzheimer's patients to assess disease progression.

Buying into OXIS "will not directly help or interfere or change in any way our Phenserine program," Neill said, but it does broaden Axonyx's portfolio into "other interesting things" in the area of central nervous system disease, especially neurodegenerative disorders.

OXIS' oxidative stress portfolio includes products such as BXT-51072, Orgotein and L-Ergothioneine. The first is the company's lead drug candidate, which has completed a Phase IIa trial in inflammatory bowel disease. Further clinical studies continue to be reviewed.

Orgotein is a preparation of superoxide dismutase (SOD), a naturally occurring free-radical-scavenging therapeutic enzyme with anti-inflammatory activity, approved in Spain for the prevention and treatment of radiation-induced tissue inflammatory reaction and fibrosis.

Synthetically derived L-Ergothioneine, one of the more powerful antioxidants available, is sold by OXIS as an anti-ageing agent in skin-care products. The firm is conducting tests and plans to commercialize a line of Ergothioneine products as dietary supplements in the nutraceutical market, under the brand-name Ergold.

OXIS gets revenue mainly from sales of OXIS Health Products research kits, chemicals such as Ergothioneine to the cosmetics industry and researchers, and bovine SOD for human clinical use in Spain.

"There's nothing wrong with the Phenserine program," Neill said. Axonyx wants to sift OXIS' offerings to find what might be useful in research ahead.

"I'm going out there tomorrow to spend the rest of the week and evaluate their technologies," he said Tuesday.

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