NaPro BioTherapeutics Inc. intends to sell its generic injectable paclitaxel business to its oldest business partner, Faulding Pharmaceutical Co., in a cash deal worth more than $71.7 million.
Ridding itself of injectable paclitaxel, the generic for Taxol, will allow NaPro to turn its full-time focus to its drug development program, currently in the preclinical stage. The Boulder, Colo.-based company is developing candidates for hard-to-treat cancers and illnesses such as sickle cell and Huntington's disease.
In a conference call with analysts, investors and reporters Tuesday morning, Leonard Shaykin, company chairman and CEO, said NaPro shareholders are expected to vote on the sale in the fourth quarter. Faulding, a subsidiary of Mayne Group Ltd. in Australia, will acquire NaPro's paclitaxel manufacturing assets, yew plantations, more than 100 domestic and international issued and pending paclitaxel patents, a worldwide registration dossier, worldwide development and supply agreements, inventories and related liabilities.
NaPro, on the other hand, will retain access to intellectual property not directly related to the generic injectable paclitaxel.
And in a related matter, Faulding plans to buy Abbott Laboratories' marketing and distribution rights to NaPro's paclitaxel in North America. By way of that transaction, Faulding also will acquire Abbott's 2 million shares of NaPro common stock.
On consummation of the sale, Shaykin said, development agreements with partners Abbott and Faulding will terminate.
Stacey Eisen, an Abbott spokeswoman, declined to discuss financial arrangements between Abbott and the others. However, she told BioWorld Today that Abbott divested its paclitaxel business for two reasons. "First, we do not have a full generic oncology product line to complement the product, and second, Abbott has a very strong internal oncology pipeline, and this move will allow us to further optimize our efforts by concentrating our financial, commercial and clinical resources on our own clinical pipeline."
Abbott and NaPro entered a 20-year deal to develop and commercialize at least one formulization of paclitaxel in 1999. When signed, the agreement was valued at $125 million. (See BioWorld Today, July 27, 1999.)
Financially, Faulding will pay $71.7 million plus receivables at the close of the transaction. While Shaykin did not specify the anticipated dollar amount of receivables, he said the total was about $8.1 million at the end of the second quarter.
Once the deal closes, NaPro plans to repay a $21.7 million debt to Abbott, of Abbott Park, Ill., leaving NaPro with an estimated $60 million in cash, Robert Cohen, NaPro's vice president of investor relations, told BioWorld Today.
The employees associated with paclitaxel will go with the business. Cohen said he's not sure of Faulding's plans surrounding staff.
Meanwhile, NaPro should be left with about 60 employees and a burn rate of $1 million to $1.5 million a month to move the company along in the drug development business, Cohen said.
The company believes one or more of its candidates will enter the clinic in 2004 or 2005.
In cancer, the company is developing targeted and nontargeted new chemical entities. Shaykin said its nontargeted entity is a novel taxane that appears to be equal to or superior to paclitaxel in a range of in vitro cancer cell lines, and it appears to be significantly more effective in cell lines shown to exhibit multidrug resistance to taxanes.
The company also has targeted candidates based on proprietary peptides it has in-licensed. One of the peptides is specific to head and neck cancer and the other is specific to pancreatic, small-cell lung and other gastric cancers.
NaPro's other area of focus surrounds its Gene Editing program. That technology creates single nucleotide polymorphisms (SNPs) or haplotypes in any gene of interest that is specifically designed in artificial chromosomes, so researchers can order "custom-designed" genes modified at the single-base-pair level and make specific isogenic SNP panels of interest for functional assays. Gene editing lets scientists create specific genes ready for transfer into specific cell lines or animal models, using them for target validation and assays testing drug safety and efficacy.
NaPro's stock (NASDAQ:NPRO) closed Tuesday at $1.77, up 15.7 cents.