Despite a long courtship, a summertime biotech romance appears to have fizzled.

Epimmune Inc. canceled its merger agreement with Anosys Inc., a deal first reported three months ago, and hired a financial adviser to consult on alternate strategies going forward.

"We had good intentions," Epimmune President and CEO Emile Loria told BioWorld Today. "The merger was based on technology and products - but its execution [required] the fulfillment of a number of conditions, and those conditions were not there at the end."

Anosys co-founder Jean-Bernard Le Pecq, its chief scientific officer, also declined to point to specific reasons for the breakup. Epimmune's release said that "conditions did not support the concept of the combined company." But Loria said the company would find an alternate match.

"We have a list of potential candidates for Epimmune going forward, because as a small biotech company we need critical mass," he added. "I think we will still pursue this area very actively."

Loria said Epimmune could look to merge with a larger public company in the near future, with preliminary discussions likely by early next month as it moves beyond the cancelled union.

When Epimmune and Anosys announced the merger agreement, the companies planned to combine their immunotherapeutic pipelines to further develop their cancer and infectious disease products.

In the deal, initially valued at $13.5 million based on the $1.60 closing price of Epimmune's stock the day before the news was made public, the San Diego-based company was to issue about 8.4 million common shares in exchange for all of privately held Anosys' common and preferred stock. Epimmune reported about 11.7 million shares outstanding through March 31. After the merger, its existing shareholders would have controlled 65 percent of the combined company while shareholders in Menlo Park, Calif.-based Anosys would have owned no more than 35 percent. (See BioWorld Today, May 13, 2003.)

Among various closing terms, the transaction also was subject to a financing for the combined entity - a financing that never closed. Loria said the inability to secure such funding was one impediment to closing the merger.

"We certainly wanted to have as much cash as possible, but that was not the only point," he added. "We have shareholders on our side, but there are also shareholders on their side as a private company. There is a difficulty sometimes in articulating what is in the best interests of both sides."

Epimmune's stock (NASDAQ:EPMN) lost 13 cents Wednesday to close at $1.58. Scheduled to report its financial results today for the period ended June 30, Epimmune's most recent quarterly statement revealed a $1.8 million net loss along with revenues of about $1.4 million. For the period ended March 31, the company's cash reserves totaled $7.6 million.

The merger initially was floated three months earlier, when Epimmune disclosed the idea of combining its epitope technology with Anosys' exosome delivery technology to create therapeutics that activate antigen-specific immune responses. (See BioWorld Today, Feb. 14, 2003.)

Anosys has raised $35 million since its 1997 founding by Le Pecq and Henri Mura, its chairman and CEO. Both previously were with Lyon, France-based Aventis SA, one of Anosys' primary shareholders along with Kirin Brewery Co. Ltd., of Tokyo, and BankInvest Biomedical Venture, of Copenhagen, Denmark. Le Pecq said the company's board would decide whether to explore additional merger opportunities or continue on its own.

"That's a decision of the board," he told BioWorld Today, "but for the present time they probably would decide to continue as we have done in the past."

The relationship with Epimmune dates to September 2001, when Anosys acquired a nonexclusive license to certain cancer antigens for use in its cancer therapy program. The deal covered patented and nonpatented rights to Epimmune's universal breast, colon, lung and prostate epitope packages for use in ex vivo cancer therapy.

From that agreement, Anosys developed antigens for its lead therapeutic cancer vaccine program, along with antigens from the Ludwig Institute for Cancer Research in Hilden, Germany, and the National Institutes of Health in Bethesda, Md. The company is conducting Phase I/II trials of its acellular anticancer dexosomes cancer vaccine products in lung cancer and melanoma patients.

Epimmune's infectious disease program continues to move forward, Loria said, much of it in partnership with Genencor International Inc. The Palo Alto, Calif.-based company, which took a 10 percent equity stake in Epimmune as part of their deal last July, expects to complete an investigational new drug application by the end of the year for a hepatitis B vaccine developed in concert with Epimmune. The partners also continue to investigate vaccines for human papillomavirus and hepatitis C.

In partnership with the NIH, Epimmune advanced a therapeutic vaccine candidate for HIV called EP-1090 into Phase I/II trials. The government agency also is collaborating with Epimmune on a malaria vaccine that remains in preclinical development. On its own, Epimmune's cancer vaccine program includes EP-2101, a multi-epitope vaccine in Phase I/II trials in lung and colorectal cancer patients.

Loria said Epimmune continues to look for partners such as Anosys that license epitope technology for their own programs. Such licensing partners provide Epimmune a consistent source of revenue - the company recorded $8.2 million in 2001 revenues, $7.1 million last year and projects this year's revenue to range between $8 million and $10 million.

Perhaps those figures, which also are bolstered by government grants, could help Epimmune court an autumn suitor.