LONDON - The private gene therapy company Cobra Therapeutics Ltd., which has raised more than #30 million in three funding rounds, has been acquired by one of its shareholders, ML Laboratories plc, in all-share deal that values Cobra at #8 million (US$12.7 million).

In addition, ML Laboratories, of Warrington, Cheshire, will pay up to #12 million in milestone payments.

Richard Moulson, financial director of Cobra, told BioWorld International, "We found it difficult to sustain the company's independence in the current market. We undertook a fund-raising last year and couldn't complete it. In those circumstances you don't have any choice." The company was trying to raise #5 million.

Cobra's facilities in Keele, Staffordshire, will be retained, and CEO David Bloxham expects to stay for a year to ensure a smooth transition.

Moulson noted, "ML has a history of buying companies and keeping them intact. I'm delighted because the staff, science and programs have a much more secure future than they did at the end of last year."

He believes ML Laboratories will be a good fit. "As a shareholder it knows the [Cobra] management team, and has watched, and I hope been reasonably impressed. It has some gene therapy activity that complements ours and is interested in buying an R&D capability."

Cobra was established in 1992 as Therexsys (for Therapeutic Expression Systems) to commercialize research from the government-funded Medical Research Council. The focus was on Locus Control Regions, DNA constructs that it was believed would be able to target therapeutic genes and control their expression. The technology failed at the preclinical stage and the founding CEO Roger Craig left, to be succeeded in 1998 by Bloxham, who joined from Celltech.

The company's name was changed when it acquired, late in 1998, Cobra, a spinout from Birmingham University. This switched the focus to using adenoviral vectors to deliver genes in cancer treatments. The lead compound, a gene directed enzyme prodrug therapy, is due to go into clinical trials this quarter.

It uses an adenovirus to deliver a bacterial nitroreductase gene to cancer cells, with the aim of converting a previously injected prodrug, CB1954, into a cytotoxic. There were no adverse reactions in a safety trial of CB1954, and Cobra has permission for a trial in head and neck cancer from national authorities. However, Moulson is concerned that the adverse publicity around gene therapy trials in the U.S. could hold up local regulatory approvals.

"You have got to get a certain number of ducks in a row to be able to go ahead with trials," he said. "Although the problems in the U.S. are not a failure of gene therapy but a failure to follow clinical protocols, the banner headlines don't help."