West Coast Editor

With a compound for acute atrial arrhythmia entering Phase III trials, Vancouver, British Columbia-based Cardiome Pharma Corp. said it plans to acquire Paralex Inc., thereby gaining more potential heart drugs including one ready to enter Phase II studies for congestive heart failure in exchange for 33.3 million Cardiome shares.

Paralex would end up owning about 45 percent of the company, somewhere between $20 million and $25 million in Canadian dollars, depending on the day you measure the price of the stock, said Robert Rieder, president and CEO of Cardiome.

The deal is still subject to shareholder and regulatory approval, as well as a Cardiome financing, but on the day it was signed, Cardiome s shares were trading at about 60 cents, so we see it as a $20 million deal, or about US$12.61 million, Rieder said, adding that the financing of about US$10 million is expected to finish in January.

Obviously, if you re going to undergo this type of dilution, you have to have appropriate financing in place, Rieder said. We don t think there s any particular difficulty in doing the financing, but we would not want to be stuck as one of those companies that s technology rich and cash poor.

Privately held Paralex, of New York, brings to the table intellectual property related to cardiovascular applications of xanthine oxidase inhibitors (licensed from Johns Hopkins University), plus an option to acquire a Phase III drug candidate from the same category for gout.

Xanthine oxidase inhibitors work by sensitizing cardiac muscle cells to calcium ions, a key determinant of cardiac muscle function. The CHF drug is oxypurinol, the active metabolite of allopurinol, currently manufactured and sold as a gout drug by about 20 firms worldwide, including London-based GlaxoSmithKline plc, under the trade name Zyloric, Rieder said. Allopurinol has no significant side effects, although about 2 percent of users are allergic to it, he added.

GlaxoSmithKline also had an oxypurinol program that it licensed to Ilex Oncology Inc., of San Antonio, which has taken the product, known under the name Oxyprim, through Phase III trials. Paralex, in turn, licensed it from Ilex. Now, the portfolio belongs to Paralex, and soon it will be in Cardiome s hands.

The gout applications of oxypurinol on the label will cover, at least initially, only those 2 percent allergic to allopurinol, Rieder noted so, although it s likely to gain approval, the market would be rather small.

More importantly, though, Paralex acquired from Ilex rights to a clinical and preclinical data package that would support an immediate investigational new drug application for a Phase II in CHF with oxypurinol, Rieder said.

The challenge has been to fully understand the mechanism of action, he added. It s via a different pathway [for CHF] than that used for treating gout.

Allopurinol, meanwhile, has been tested in a 10-patient trial in CHF patients.

In early tests, oxypurinol was shown to improve cardiac efficiency in animals and humans, he said, and we re going into it with a strong sense of confidence, with regard to the safety.

Cardiome also has RSD1235, for arrhythmia, entering Phase II trials.

We have seven sites open, and we expect to enroll our first patient in short order, Rieder said. About 60 patients will be tested at 10 to 15 centers, with a mid-year finish expected and data available in the third quarter. Two other heart drugs are in earlier stages of development.

Cardiome s stock (TSE:COM) closed unchanged Friday at C84 cents.