By Mary Welch
Modex Therapeutics Ltd. entered into a research collaboration with Novartis Pharma AG in the field of oncology while separately indicating its intention to raise between $42.9 million and $50.4 million in an initial public offering.
The Lausanne, Switzerland-based biotech firm will offer up to 495,00 shares at a price range of 148 Swiss francs (US$91) to 168 Swiss francs per share (US$103), valuing the company at about $117 million to $134 million. The offering of 495,000 shares is equal to 33.8 percent of the company. The underwriters have an option to purchase another 60,000 shares to cover overallotments.
The lead manager is Bank J. Vontobel & Co. AG, of Zurich, Switzerland, which expects about 75 percent of the offering to be placed with institutional clients.
The company's stock will be offered on the Swiss SWX New Market on June 23.
The company's largest shareholder is Lombard Odier & Cie Ltd., of Geneva, Switzerland. Other investors are Alta Partners, of San Francisco; Alta Berkeley, of London; Atlas Venture, of Boston; Banexi Ventures, of Paris; Novartis Venture Fund, of Basel, Switzerland; 3i Group plc, of London; and SETE Venture.
The deal with Basel-based Novartis is a research collaboration for the application of Modex's Encapsulated Cell Therapy (ECT) system in oncology. The companies will evaluate the ECT system's potential to treat solid tumors through the continuous delivery of an undisclosed protein. Novartis will fund all research for the next 18 months, and will have an option to license the technology for this indication, as well as other protein-responsive diseases.
The ECT biodelivery system uses implantable human cells that are encapsulated to isolate them from the patient's immune system. These cells have been genetically engineered for continuous long-term delivery of therapeutic proteins. The system may have broad clinical applicability for the treatment of local or systemic chronic diseases, and may provide an improved protein delivery option for both existing and novel proteins, the company said.
The system currently is being developed for indications including multiple sclerosis, anemia and hepatitis. A major benefit of the device is that it can produce and deliver therapeutic proteins continuously over several months, thus eliminating the need for frequent injections. Other potential advantages are that it avoids peaks in serum protein levels and may reduce or eliminate side effects, the company said.
Modex's lead product is Epidex, a skin substitute grown from a patient's own hair cells. It is available in Europe.
A timetable for a U.S. launch is dependent upon whether the FDA classifies it as a drug or a device.
Modex, which got its start as a spin-off from CytoTherapeutics Inc., of Providence, R.I. (now known as StemCells Inc.), expects a 3 percent market penetration for Epidex worldwide by 2003. It projects that it will have 15 percent to 20 percent of the market over the next five to 10 years.
In addition to Epidex, the company has two other products in its pipeline: BioDelivery, an implant system to treat chronic diseases such as anemia, hepatitis C and multiple sclerosis, and BioPancreas, which aims to treat diabetes.