In a spin-off move that, as sportswriters might say, could benefit both teams, Alliance Pharmaceutical Corp. has agreed to sell off its medical imaging assets - primarily related to its Imagent product - to Photogen Technologies Inc.
The deal offers a large upside for Photogen, of New Hope, Pa., bannered enthusiastically by Taffy Williams, company president, who said Imagent will add greatly to its new emphasis on imaging agents, especially in its opportunity in the cardiovascular sector.
It could also help San Diego-based Alliance by allowing that company to focus on development of its oxygen therapeutic product Oxygent, which has hit regulatory rough waters via clinical and financing setbacks.
The initial benefit for Alliance will be added cash, but neither company was disclosing the deal value on Monday, saying that details concerning what Williams called "significant financing-related issues" are yet to be worked out.
Photogen stock (NASDAQ:PHGND) gained $1.35 Monday, or 281 percent, to close at $1.83. Alliance's stock (NASDAQ: ALLP) fell 1 cent to close at 14 cents.
Williams expressed obvious enthusiasm about the deal and its ability to push Photogen's new focus on what he termed "the imaging space," listing a variety of strong matchups between the company's mission and the assets acquired.
Alliance, he said, "has an FDA-approved product [Imagent] . . . has a product available for launch, already has a number of sales reps trained, has manufacturing capability that could be used to make the product, and the people and ability to launch it in the first half of next year."
Photogen has turned its attention to the imaging arena after splitting off its photodynamic therapeutic and laser device assets to five founding shareholders in August and reorganizing the remaining portion of the firm keyed to diagnostic imaging.
The purchase of the Imagent assets is contingent on due diligence and Photogen's obtaining financing to consummate the deal. At the same time, Alliance issued a statement saying that [Alliance] would have to pay a break-up fee if the deal does not go through under "certain circumstances," which were undisclosed.
Alliance received FDA clearance for Imagent, an ultrasound imaging agent for imaging of the left ventricle of the heart, in June. Formerly known as Imavist, Imagent was cleared for patients with suboptimal echocardiograms to opacify the ventricle, thus improving visualization of its pumping activity and helping to delineate diagnosis and possible therapies.
Other benefits of the acquisition would be Alliance's already established marketing agreement with Cardinal Healthcare, of Dublin, Ohio, and recently approved reimbursement codes covering the imaging procedure.
Both Williams and Gwen Rosenberg, head of corporate communications for Alliance, said they assumed that the partnership with Cardinal will be continued with Photogen. Williams called that pact an "integral part" of the proposed deal.
And he said that new reimbursement codes approved this past year could help drive Imagent into a market he has seen grow from $20 million to $30 million annually "in the last year or so." Rather than physicians having to pay for the contrast imaging agent out of the basic procedure cost, they can now bill it as "an independently reimbursed portion" of the procedure, which should contribute significantly to product acceptance, he said.
Physicians using this type of imaging are still currently in the single digits, he noted, another piece of data promising opportunity for growth.
Besides Imagent, Alliance's other major product is Oxygent.
Rosenberg said "the majority" of Alliance's 45-person staff - the specific number not yet known - would now move to Photogen, with the remainder to stay, and stay focused, on development of Oxygent, its oxygen therapeutic.
R&D for that product still appears to be an uphill climb, however, with more than $200 million already poured into its development as part of a joint venture with Baxter.
This past August, Alliance reduced its staff by 40 percent to around 80 employees and has seen continuing attrition taking place since then. In August, Alliance also said that it was putting Oxygent development "on the shelf" for about 90 days and that it would turn its full attention to the market launch of Imagent, including training of sales staff.
The proposed sale appears to bring Oxygent back down from that shelf, with Rosenberg saying that the company expects to start "a new Phase III" clinical trial for the product in the first half of 2003.
The company basically had completed one Phase III trial using Oxygent in general surgery. The new trial will also be in general surgery, using Oxygent "with the intent to reduce or avoid the need for donor blood," Rosenberg said.
Williams projected the deal closing within 90 days.
He said that the first priority will be the launch of Imagent, with future plans calling for expansions into cardiovascular imaging's other applications.
Photogen reports a variety of other development programs for a platform consisting of "a versatile iodinated nanoparticulate formulation that shows promise as a subcutaneous, intravenous or intra-arterial agent for both cardiovascular imaging and lymphography."
That product, named PH-50, is in Phase I clinical trials and its future development could be pushed by additional synergies provided by the acquisition from Alliance, Williams said.