By Randall Osborne

West Coast Editor

Astralis LLC, a start-up firm with its lead product for psoriasis only in overseas studies and no investigational new drug application filed yet with the FDA, won the vote from Hercules Development Corp., which is buying the company with 28 million shares of new stock.

At Thursday¿s $3.95 closing price of Hercules¿ shares (OTCBB:HDVG), the deal is worth $110.6 million. A private equity placement by Hercules of $3.2 million also is part of the deal. Hercules¿ stock closed Friday at $3.66, down 29 cents.

¿The funds have been raised, and they go into a trust today,¿ said Richard Genovese, president of the Vancouver, British Columbia-based Investor Relations Group, which helped put the agreement together. It becomes effective in 30 days.

Astralis has been doing research in Venezuela for eight years, said Mike Ajnsztajn, CEO of the company, which soon will be based entirely in Florham Park, N.J., where it was founded in January.

Its drug, a peptide, works by creating a cellular rather than humoral response, he said.

¿We¿re not creating antibodies, so I can give you a million shots, and you will not react,¿ Ajnsztajn told BioWorld Today. ¿We¿re fighting against the cause, and the rest of the drugs are fighting against the effect.¿

Hercules, of Boulder, Colo., which manages real estate in that city and in Denver, said in August that it had was beset by volatility due to short selling of its stock.

Genovese told BioWorld Today that Hercules ¿was an empty shell, trading on the Over-the-Counter Bulletin Board, and this was an opportunity for Astralis to achieve its funding needs.¿

¿Astralis will end up with about 75 percent of Hercules [when the reverse takeover is done],¿ he added. Hercules will have about 38 million shares outstanding.

Astralis has tested Psoraxine in trials with 3,000 patients in Venezuela, and 638 remitted completely. One thousand patients had their psoriasis back off by 70 percent to 90 percent, based on the Psoriasis Area and Severity Index (PASI) before and after treatment. Results have not been independently verified, but the company said 96 percent of patients responded positively overall, with few adverse side effects.

¿They blew the FDA¿s mind with the data they have, and the FDA is telling them how to do their initial filing [of an investigational new drug application for Phase Ib trials],¿ Genovese said. Existing data from the Venezuelan study could reduce the number of early stage trials required here, he added.

Patents related to DNA sequence of peptides and a new gene sequence behind Psoraxine have been applied for, along with composition of matter and method of use patents. Astralis hopes to get a patent in the first quarter of next year, and aims to file for patents overseas within the next 12 months.

As part of the reverse takeover, Hercules shareholders also will cancel into a treasury 23.5 million shares, a move made to ¿prevent a tax hit¿ for Astralis shareholders, Genovese said.