By Matthew Willett
Corixa Corp., newly merged with Coulter Pharmaceuticals Inc. in a $900 million stock swap, took down the remaining $37.5 million of its credit line with Castle Gate LLC in a funding intended to support pipeline development.
In the first $12.5 million tranche, Seattle-based Corixa issued 12,500 shares of Series A preferred stock convertible into common stock at $8.50 per share. Dividends were to accrue at 5 percent per year, and could be paid in cash or stock, at the company's option.
This tranche merited a 37,500-share Series B issuance to Castle Gate and a 10-year warrant to purchase an additional 50,000 shares of Corixa.
The funding comes on the heels of the completion of the company's merger with Coulter 12 days ago, a move the companies said could create an immunotherapy powerhouse. (See BioWorld Today, Oct. 17, 2000.)
"After the Coulter merger we believe we become sustainable and perhaps an emerging leader in immunotherapy," Corixa Chairman and CEO Steven Gillis told BioWorld Today. "Our core technologies are in vaccines and body-based therapeutics, and within those there are other technologies that provide us with opportunities to develop products."
With a pipeline 16 products deep and about $200 million in cash in the bank, Corixa's most recent funding was a matter of timing, Gillis said.
"This credit line was put in place with Castle Gate in April 1999, and it expires in April 2001, and we were able to work out terms with Castle Gate that were suitable to both sides," he said. "Therefore, we elected to draw the remaining $37.5 million now. Who's to say what the market will be like in April 2001."
The main strength Gillis emphasized, however, of the merged Corixa is the company's original technological strength: its antigen identification abilities.
"I'm excited about our original capacity to discover antigens and determine which of those we can use in which product, antibody or vaccine-based products, or which ones simply have merit as diagnostics," Gillis said. "If you have that capability, that antibody-discovery engine, you have a large capacity for product development provided you can attract partner or equity-market financing to keep things moving."
Atop the pile of compounds in development, he said, are the drug candidates in the forefront of the development cycle, drugs on the doorstep of approval.
"I always like to say I love all my children, and I don't want to get into a situation where I'm picking one over another, but the things that people focus on are things in the near term," he said.
"The products you'd count there are, obviously, Bexxar, which has a [biologics license application] accepted on and pending further review in the FDA's priority review status, so we're on a six-month timeline for that, and we've told people we'll file a BLA on Melacine in mid-2001. We also have an interesting vaccine approach to the treatment of psoriasis, and our flagship adjuvant MPL, which has been used to enhance the efficacy of a number of vaccines in the clinic."
Corixa's position on partnerships hasn't changed much through the merger, he said.
"Corixa prior to the Coulter transaction built itself in partnerships with major pharma companies. With the Coulter transaction we bring in another partner, but one we already do business with, GlaxoSmithKline," he said.
What could change, he said, is the scope of the partnerships Corixa enters in the future, especially in light of the U.S. sales force acquired with the Coulter merger.
"You'll continue to see Corixa in partnerships with organizations, but now, with the Coulter transaction, we have a U.S. sales force that could change the dynamic of some of the partnerships. For example, if we have a vaccine we haven't partnered, we'd likely be opposed to partnering it on a worldwide basis if we have a sales force in the U.S. We'd likely retain, at least, U.S. marketing rights."
But beyond keeping more of the pie in future deals, Gillis said the company will continue the tack it set in the beginning.
"We need to deliver on some of the products we have on the doorstep of approval, but we also believe that the industry itself remains one that's ripe for further consolidation," he said. "I think our track record speaks for itself. A lot of companies talk about growth through merger and acquisition, but I think Corixa is one of the few that's actually done it, and I don't think we'll stop at this point in time."