Adherex Technologies Inc. said it entered an agreement with privately held Oxiquant Inc. for a stock merger, creating an entity to be located at the former's Ottawa, Ontario, site operating under its name. Focused on cancer drugs, the merged firm expects to have four candidates in clinical trials next year.
Robin Norris, president and chief operating officer of Adherex, who is keeping his position in the new company, said Adherex issued about 40 million new shares to acquire New York-based Oxiquant. Using Tuesday's closing price of C44.5 cents, the deal is valued at about C$18 million (US$11.3 million), Norris said.
"It's an incredible change of fortune [for Adherex]," he told BioWorld Today, noting that his firm had only one product in its pipeline.
Adherex itself had 40 million shares outstanding before the deal, so the company essentially doubled itself to make the acquisition. Therefore, "another way of looking at it is, we had to use half the company, or $9 million, to get three products in clinical trials," Norris said. "We think this is really going to pay dividends to shareholders, hopefully in the short term and certainly in the long term."
Mark Rogers, CEO of Duke University Medical Center, will be chairman of the new company. Also continuing in his position at the new firm will be Adherex CEO John Brooks.
Adherex will form a spin-off company, Cadherin Biomedical Research Inc., to hold the firm's non-cancer assets, including transdermal delivery technology, and the parent firm's shareholders will get a special dividend of an equal number of shares in Cadherin.
The deal, unanimously approved by both boards, is subject to regulatory and shareholder approval and will be included on the agenda at the company's annual and special meeting, slated for Nov. 5.
Oxiquant, of New York, is focused on cancer chemotherapy drugs. The four compounds the merged company will boast are Exherin, Adherex's drug candidate that targets N-cadherin to destroy cancer blood vessels, and three products from Oxiquant: sodium thiosulfate, to be used as a chemoprotectant to prevent disabling loss of hearing associated with certain drugs, including platinum-based anticancer agents; Mesna, which has been shown to have chemotherapeutic activity in the low-oxygen environments of tumors (and is potentially synergistic with Exherin); and N-acetylcysteine, a chemoprotectant being studied for treatment in the prevention of bone marrow suppression and gastric mucosal damage resulting from chemotherapy regimens.
Oxiquant's sodium thiosulfate is the furthest along, in Phase II trials, and could reach the market as early as 2005.
"There have been two Phase II trials in [a total of] 129 patients with very powerful positive results," Norris said. "In kids with tumors, if they get platinum drugs, between 50 [percent] and 90 percent get deafness. There's absolutely no treatment for it."
The drug will probably win fast-track designation, and initially will target children, he said.
As a pharmaceutical, "sodium thiosulfate is only approved for one thing, as part of a cyanide antidote," Norris said. "It's known to be relatively safe, which plays in our favor."
With regard to the N-cadherin work, Adherex has a collaboration with AstraZeneca plc, of London, and Adherex plans to continue development before opening talks with AstraZeneca about a licensing agreement. Adherex plans its own Phase I trial with Exherin later this year.
Adherex also is asking shareholders to approve a 4-to-1 share consolidation of capital stock, which would give the company about 21 million shares outstanding after the Oxiquant merger.
Adherex's stock (TSE:AHX) closed Wednesday at C46 cents, up 2 cents.