By Kim Coghill

Washington Editor

Biota Holdings Ltd. said it accelerated its entry into the U.S. biotechnology market through the purchase of NuMax Pharmaceuticals Inc., a privately held year-old company.

As part of the deal Biota, of Melbourne, Australia, will spend $8 million over two years to fund NuMax¿s drug discovery programs, and will issue employee stock amounting to no more than 20 percent of the issued capital of the new company.

NuMax, of Carlsbad, Calif., will become Biota Inc., the U.S.-based division. The company will double its staff from the current five to 10.

Sterling Johnson, CEO of the newly formed company to be located in Carlsbad, would not release specific details of the purchase, but did say, ¿The deal is best described as an acquisition in which a combination of stock and cash was used to accomplish a mission. And Biota Holdings has committed $8 million to get the company off the ground.¿

In a prepared statement, Hugh Niall, CEO of Biota Holdings, said, ¿With the acquisition of NuMax Pharmaceuticals, Biota Holdings has immediately added new vital targets and a new technology to its research and development portfolio. It also will accelerate Biota¿s push into the U.S. biotechnology market. The formation of U.S.-based Biota Inc. will enable the company to rapidly pursue a broader range of activities that will add value for Biota shareholders.¿

NuMax was founded based on novel MAX (Matrix Anti-Enzyme) technology for rapid identification of new drug candidates. The technology, which was developed by pharmaceutical chemist P. Dan Cook, will be applied to viral targets such as hepatitis B and herpes as well as to other infective agents.

The same technology has potential application to identify new therapies that can stimulate or suppress the immune system, an area with wide applicability in infectious diseases.

Biota Holdings, founded in the mid-1980s, is an Australian-listed company (ASX:BTA) that researches and develops pharmaceuticals for the treatment of respiratory infections. Its influenza drug, Relenza (zanamivir), is currently marketed worldwide in collaboration with GlaxoSmithKline plc of London. Biota¿s other influenza product, FLU OIA, a diagnostic test kit, is licensed to Thermo BioStar, of Boulder, Colo., for manufacture and sales in the U.S. The diagnostic test kit can detect influenza A and B in 15 minutes.

In April at a presentation at the University of Virginia in Charlottesville, Biota Holdings presented data showing that one of its compounds, BTA188, was effective against a range of rhinoviruses obtained from human clinical samples. It compared favorably in its antiviral activity to the only anti-rhinovirus drug in advanced clinical development.

Biota Holdings, for the half-year ending Dec. 31, 2000, reported a profit of A$1.5 million (US$792,000) on revenues of A$7.6 million for the period. For the same period in 1999, total revenues were A$8.9 million.

Johnson, the U.S. CEO, has worked as a consultant for Biota Holdings in recent years. Before that, he was president and CEO of Princeton, N.J.-based Escalon Medical Corp., was employed with Indianapolis-based Eli Lilly and Co. and with The Liposome Co., of Princeton.

Cook, NuMax¿s founder and former vice president of chemistry at ISIS Pharmaceuticals Inc., of Palo Alto, Calif., will become Biota Inc.¿s chief science officer. Thomas Bruice, formerly of Genelabs Technologies Inc., of Redwood City, Calif., and ISIS, will work as vice president of biochemistry and biophysics.