BioWorld International Correspondent

MUNICH, Germany - MediGene AG has secured the cooperation of Evotec OAI AG in launching a new company out of MediGene's recently spun off cardiological drug discovery program. The new company will be known as Genovation.

MediGene, of Martinsried, and Evotec, of Hamburg, described their cooperation as a strategic partnership. Under the terms of the agreement, Evotec will hold up to 15 percent of Genovation. Evotec will contribute expertise in drug discovery and will conclude an exclusive service agreement to carry out chemical screening and substance optimization procedures. No additional financial terms were disclosed.

The cooperation with Evotec is just the first step toward launching the new company, and MediGene is actively seeking additional investors who will contribute fresh capital. Peter Heinrich, CEO of MediGene, told BioWorld International, "We expect to complete financing by the end of the year." MediGene's contribution to Genovation will be strictly assets and not additional cash, he added.

"We have been getting good feedback" on the spin-off, Heinrich said. He also said that MediGene was concentrating on its core competencies and was on its way to reaching its goal of becoming a fully integrated biopharmaceutical company. The goal will not be reached with organic growth only, he said. MediGene also plans on making acquisitions.

Alexander Dexne, MediGene's chief financial officer, said that for the second half of 2002, the cardiology spin-off and other cost-saving measures would bring a significant reduction in the company's previous burn rate of €3.6 million per month. He declined to be more specific about savings, but said that the reduction would be less than €1 million per month. The company's cash reserves of €65 million put it on solid footing, he said. (See BioWorld International, Aug. 21, 2002.)

Dexne added that he saw the restructuring of the Neuer Markt as a positive development, both for MediGene and the sector as a whole. "The liquidity has just been drained out of the Neuer Markt," he said. (See BioWorld International, Oct. 2, 2002.)

Genovation's field of cardiology was the first area of investigation for MediGene's drug discovery program, which was started in 1995. Research into a once-promising compound for congestive heart failure was discontinued this summer after disappointing results in Phase II trials.