By Matthew Willett
Elan Corp. plc and SafeScience Inc. released terms related to a previously announced agreement that will form a joint venture between the companies based on SafeScience¿s lead oncology candidate, GBC-590.
The funding of the joint venture could result in Elan owning up to 11.6 million shares of SafeScience, which had about 25.7 million shares outstanding as of the end of the first quarter. Elan will make an initial equity investment of $5 million in SafeScience, of Boston, and give SafeScience an additional $12 million to purchase an equity interest in the joint venture, which will have a license to SafeScience¿s intellectual property related to GBC-590.
In return, Elan will receive a mix of SafeScience securities: common stock, convertible preferred stock, convertible exchangeable preferred stock and warrants. Elan, of Dublin, Ireland, also will receive preferred equity interest in the joint venture.
The agreement and the capital come none too soon for SafeScience, which faces delisting from the Nasdaq Small Cap market for failure to comply with that market¿s guidelines regarding minimum net tangible assets, market capitalization or earnings standards. The company is currently appealing the market¿s determination to delist its shares.
SafeScience representatives were unavailable for comment Monday.
SafeScience moved to the Small Cap market in 1998, from the Over-the-Counter Bulletin Board. Earlier that year the company changed its name from IGG International Inc.
As of March 31, SafeScience had cash and cash equivalents of $1.8 million. It reported a net loss of $3 million for the quarter, or 12 cents per share.
Its lead compound, GBC-590, entered a Phase II trial in June 2000 in patients with colorectal carcinoma. That trial is designed to determine the compound¿s safety and efficacy in the population of patients who have failed no more than two prior regimens of chemotherapy.
The joint venture for Elan is a common partnering strategy. Most recently Elan formed joint ventures with Inex Pharmaceuticals Corp., of Vancouver, British Columbia, to develop and commercialize Inex¿s lead anticancer product, Onco TCS. Just months before, Elan formed a similar joint venture with Cogent Neuroscience Inc., of Durham, N.C., to discover and develop therapeutic gene targets for polyglutamine repeat disorders, a class of intractable brain disorders that includes Huntington¿s disease. (See BioWorld Today, May 1, 2001, and March 9, 2001.)
SafeScience¿s shares (NASDAQ:SAFS) dropped 6 cents Monday to close at $1.94. Elan¿s shares (NYSE:ELN) rose 78 cents to close at $61.78. n