By Karen Pihl-Carey
NPS Pharmaceuticals Inc. will merge with Allelix Biopharmaceuticals Inc. in a move intended to enable the companies to advance their programs independent of partnerships.
NPS, of Salt Lake City, will issue 6.5 million shares of common stock, granting Toronto-based Allelix shareholders .3238 shares of NPS stock for every share of Allelix they hold. Together, the two companies will have a cash balance of US$33 million, which will last them up to three years, said David Clark, director of corporate communications and development at NPS.
"This is a chance to really build this company and position it to achieve a high growth and to position it to be a company that can harvest its technologies without having to rely solely on a royalty-based business model," Clark told BioWorld Today. "We see this as a very nice fit of technologies, of people and of opportunities."
NPS will continue to trade on Nasdaq, while Allelix will seek a listing on the Toronto Stock Exchange for the mirror exchangeable shares. NPS' stock (NASDAQ:NPSP) closed Tuesday at $6, down $1. Allelix stock (TSE/MSE:AXB) closed at C$3.05 on the Toronto exchange, down 60 cents.
At $7 per share the deal valued Allelix at $45.5 million, not including 1 million shares for issuance to the holders of Allelix options, warrants and preferred stock. Allelix shareholders living in the U.S. will receive NPS common shares and those living in Canada have the option of receiving either NPS shares or shares of an NPS subsidiary at the same 1-for-1 ratio. NPS reported 12.7 million shares outstanding on June 30.
In a strategic restructuring, the merged company will reduce the NPS staff by 35 percent - or 40 people total, as well as reduce operating expenses for certain clinical programs. The company will operate as NPS Pharmaceuticals in the U.S. and as NPS Allelix in Canada, maintaining both locations. The merger allows NPS to create a "cross-border opportunity," Clark said.
Shareholders of both companies must approve the merger, and it must be completed by Jan. 31, 2000, or it will be terminated.
The merged company's most advanced programs include NPS' calcimimetics for hyperparathyroidism, which is partnered with Amgen Inc., of Thousand Oaks, Calif., and Kirin Brewery Co. Ltd., of Tokyo, as well as Allelix's ALX 1-11 for osteoporosis.
Calcimimetics are small molecules that stimulate calcium receptors on parathyroid cells to regulate the secretion of parathyroid hormone. A Phase II trial is under way for primary or secondary hyperparathyroidism, which affect 75,000 people in the U.S. each year or 80 percent of all kidney dialysis patients, respectively.
ALX 1-11 is a recombinant human parathyroid hormone (PTH) that recently completed a successful Phase II trial. NPS believes it is attractive as a bone-growth therapy. The compound complements the company's collaboration with SmithKline Beecham plc, of London, by adding a late-stage product to its research in calcilytics.
"The amount of cash we'll have will be sufficient not only to guarantee cash on hand, but we think it will give us the ability to go into a Phase III clinical trial of PTH on our own without having to partner," said Paul Van Damme, senior vice president and chief financial officer of Allelix. "It will preserve our independence a little bit longer."
The new company also will focus on existing partnerships with Eli Lilly & Co., of Indianapolis, on excitatory amino acid receptor antagonists for psychiatric disorders; with Janssen Pharmaceutica NV, of Beerse, Belgium, on glycine reuptake inhibitors for schizophrenia; and with Pharm-Eco Laboratories, of Lexington, Mass., on ALE 26015 for dementia. Clinical programs of the following will either be partnered or advanced by the company itself: NPS 1776 for epilepsy and bipolar disorder; NPS 1506 for stroke and other central nervous system disorders; ALX 0600 for short bowel/inflammatory bowel disorder; and ALX 0646 for migraine.