By Randall Osborne

West Coast Editor

Cancer-vaccine company Avax Technologies Inc. said it will acquire Paris-based Genopoietic SA, which focuses on cell and gene therapy, in a stock swap not to exceed 3 million shares.

Based on Tuesday's opening Avax (NASDAQ:AVXT) price of $9.687, the deal was valued at a maximum of about $29 million. Avax's stock gained $2, or 21 percent, Tuesday to close at $11.687.

Avax said it will get all of Genopoietic's outstanding shares for up to 3 million shares of its own stock and options, payable on "timely" achievement of milestones related to technologies acquired in the transaction.

Jeffrey Jonas, president and CEO of Kansas City, Mo.-based Avax, said more details would be disclosed later.

"Only a portion of those shares are issued up front," he said, adding that "more than the majority" will be issued in connection with development and commercialization milestones met by Genopoietic's technology.

Privately held Genopoietic, founded in 1993, is developing autologous chondrocytes for cartilage repair, and gene therapy to treat cancer and graft-vs.-host disease, which is a complication of bone marrow transplants. The firm also is testing its technology against autoimmune diseases, while custom-making cells and vectors for gene therapy.

Under the terms of the deal, expected to close in three to six weeks, all licenses for patents covering Genopoietic's work go to Avax, along with the French firm's research agreement with Pierre et Marie Curie University. Avax also has relationships with the cell and gene therapy labs there.

Avax is using its AC Vaccine technology to create individualized cancer vaccines. M-Vax, for stage III melanoma that has metastasized to lymph nodes - a vaccine that is custom-made from the patient's own tumor cells - has been launched in Australia, an event "critical for the success of individualized therapies around the world," Jonas said.

Although Australia is a country of only 19 million people, with an "absolute number" of new melanoma patients eligible for the vaccine of about 8,500 to 9,000 annually, it represents a good test base, Jonas said.

"The potential market for us is 1,000 to 1,500 cases each year," he added, and Avax will be educating patients on the vaccine's use in the months ahead.

"You have to remember that what we're doing has never been done," he said. "We're telling patients, 'You have to save your tumor for therapy.'"

In the U.S., a multicenter pivotal registration trial is under way, along with a Phase II trial for Stage IV melanoma. The AC Vaccine approach also is being tried against ovarian cancer, acute myelogenous leukemia, and breast cancer.

The Genopoietic deal gives Avax a solid base in Europe, where Avax intends to sell M-Vax, and provides Avax with an economy of scale, since Genopoietic's technologies also include autologous or individualized elements.

"We intend to put together, upon closing, a coherent message to investors to describe what we believe are the most important products" in the Genopoietic pipeline, Jonas said, along with an estimate of development time.

"We intend to do that as quickly as we can, as soon as the deal closes," he said.

He said the acquisition of Genopoietic, well established as a maker of biological products, is "not a gene sequencing play," but is aimed at the company's technology and lineup of potential drugs, some of which will be "in the clinic in the next year or two."

"We think the Genopoietic deal lets us have our cake and eat it, too," he said, noting that Avax gains a presence in Europe for its own work and can collaborate with mid-size companies lacking manufacturing capability there. What's more, Jonas said, the central manufacturing plant should be "regulatory-friendly," when more marketing approvals are sought.

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