BioWorld International Correspondent

ZICHRON YA'AKOV, Israel - Feeling the pinch that closed more than 25 Israeli biotech companies last year, CureTech Ltd. and Biokine Therapeutics Ltd., biotechnology start-ups developing therapies for cancer and immune-related disorders, entered a share-exchange merger agreement.

As part of the deal, Tel Aviv-based Clal Biotechnology Industries Ltd. (CBI), which already invested $4 million in CureTech, will be making "a substantial investment into the merged company." Although financial details have not been disclosed, the entire deal was valued at $15 million by CBI.

David Haselkorn, CEO of CBI, told BioWorld International, "This merger is precedent setting in Israeli biotechnology. We believe very strongly in the potential of both these companies and this move will create significant synergies."

Haselkorn added that the merged company is expected to have two drug candidates in Phase IIa trials by the end of the year: CT-AcTibody, a fully humanized antibody to enhance immune inhibition of tumor growth in a variety of cancers, and BKT100, a small-molecule inhibitor of TNF-alpha secretion by modulation of the migration of immune cells in the body. The initial clinical trial is against psoriasis.

Michael Schickler, CureTech's CEO who will be the CEO of the merged company, told BioWorld International, "The new company will be located in Clal Biotechnology's Life Sciences Facility in Yavne, which includes a GMP manufacturing pilot plant. Due to our technology platforms and the combined expertise, we are optimistic about both lead products, and have great confidence about the future viability of the pipeline."

Julian Levy, Biokine's CEO who will be vice president of business development and operations, said, "This merger provides both companies with a critical mass and the ability to compete both in terms of drug development and in the development of strategic partnerships. We have a rich clinical and preclinical pipeline and, in the CBI facility, the ability to immediately start to manufacture to meet our needs up to late-stage clinical trials." The company is slated to have 20 employees.

Haselkorn added, "It would be fair to say that the successful launch of the new CBI biotech application center stands in stark contrast to the failed attempts over the past year by several international groups to set up private biotech incubators in Israel with and without government support."

CureTech was established in 1995 based on research by Britta Hardy and Avraham Novogrodski, operating as a virtual entity out of Beilinson Hospital, attached to Tel Aviv University. In 2002, the company moved to the Clal Life Sciences Facility in Yavne, following a major equity investment by a consortium led by CBI.

Biokine was created in 2000 by Amnon Peled and Lior Carmon, later joined by Orly Eizenberg, in the Kiryat Weizmann Science Park in Ness Ziona, with funding by the Israeli Office of the Chief Scientist incubator program. In 2001, the company raised seed money from a group of private biotechnology investors.