BioWorld International Correspondent

BORNHEIM, Germany - Zentaris AG plans an initial public offering of its shares on Frankfurt's Neuer Markt on June 18.

Zentaris, of Frankfurt, Germany, is being spun out from Frankfurt-based AstaMedica AG, the pharmaceutical branch of Degussa AG, a chemistry and metallurgy group.

Up to 9.5 million shares will be offered, with Degussa selling 3.5 million of them. Degussa holds an additional greenshoe of 1.425 million shares.

Underwriters for the offering are Dresdner Kleinwort Wasserstein (the lead), and HSBC Trinkaus und Burkhardt and Landesbank Baden-Württemberg.

Zentaris was founded on Feb. 1. It was formed from parts of the research and development unit of AstaMedica, including former AstaMedica subsidiaries MainGen GmbH, Sofotec GmbH and Paris-based Europeptides.

These roots make the company a specialist in peptide and endocrinology drugs (mainly for treatment of tumors), inhalation devices and gene therapy. The company will begin with products launched or ready for market. Its pipeline is well stocked with clinical and research projects.

In Japan, Zentaris has marketing rights for Cetrorelix, an endocrinology product for supportive therapy in in vitro fertilization, Zentaris spokeswoman Michaela Schwach told BioWorld International. The company has worldwide marketing rights related to its drug inhalation devices for asthma patients. These devices are sold in Germany. The cancer-drug Lobaplatin is approved, but has not been launched. Zentaris has the marketing rights to that drug in China.

The company has 14 projects in clinical trials. Phase III trials include the 3-month and 6-month applications of leuprolide. The substance for subcutaneous injection is embedded into a biodegradable polymer, releasing the drug continuously for a long period of time.

In collaboration with the World Health Organization, Zentaris is in Phase III trials of Miltefosin for the tropical disease leishmaniasis.

"This is the first oral drug against leishmaniasis," Schwach said. Originally the compound was expected to become a cancer drug, but clinical results on long-term treatment showed severe side effects, Schwach explained. "But leishmaniasis patients are cured by this drug after four weeks of treatment. There are no problems related to tolerance," Schwach said, and added that the drug is effective in patients who have resistance against other leishmaniasis drugs.

Four Phase III clinical trials are ongoing related to inhalation devices for asthma drugs.

In Phase II trials Zentaris has applications of cetrorelix in treatment of benign prostate hyperplasia, endometriosis and myoma of the uterus.

It also has Phase I studies of cord blood stem cells.

These cord blood stem cells are expected to be of use in transplantation patients who face high-dose chemotherapy against cancer. Such treatment destroys the patient's bone marrow, which makes the blood cells. Before treatment these patients either give their own stem cells to be retransplanted after treatment or doctors prepare stem cell grafts donated by others. Such heterologous grafts may cause complications such as graft-vs.-host reactions and infections.

Zentaris subsidiary MainGen developed a technology of multiplying cord blood stem cells up to a sufficient number.

In the Phase I clinical trials on cord blood stem cells up to 15 patients are expected to participate, Schwach said. "For reasons of safety they must have a backup of autologous cells."

An additional four Phase I trials are ongoing, three of which are related to cancer drugs, the other an inhaling device for asthma patients.

Preclinical projects include gene therapies for colorectal and head and neck cancers. These projects entail viral vectors that carry self-deletion genes into certain tumor cells.

Much of the money to be raised in the IPO is expected to fuel the company's clinical trials and further development of its platforms. A minor part of the money raised will be used to improve marketing activity, Zentaris said.

Last week Genzyme Corp., of Cambridge, Mass., said it would buy up to 900,000 Zentaris shares for up to EUR16.2 million, if Zentaris closes its offering by August 31.

In addition, Genzyme and Zentaris have established a steering committee to mutually explore potential product development collaboration opportunities, Genzyme said. The agreement also calls for Genzyme to make available certain manufacturing services for Zentaris' bulk pharmaceuticals.

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