By Mary Welch

Corixa Corp. will acquire Ribi ImmunoChem Research Inc. for $56.3 million, paying $47.5 million for nearly 21 million outstanding Ribi shares and $8.8 million in cash.

"There's great synergy between the two companies," said Michelle Burris, chief financial officer for Corixa. "It's a great combination of Ribi's late-stage adjuvant technology with our antigen discovery and vaccine technology. Together we will be able to produce a formulated vaccine for our partners to present to the market."

Ribi's common stock will be converted into Corixa common stock using a fixed exchange ratio of 0.1685 per share of Ribi common stock outstanding. The $8.8 million will be paid to Rose Glen Capital, stemming from a July 1998 financing in which Ribi raised $8.24 million. At the time of the placement, the institutional investor was not named. However, the investor - since revealed to be Rose Glen - purchased 8,240 shares of convertible preferred stock bearing a 5 percent interest rate. (See BioWorld Today, July 24, 1998, p. 1.)

The deal, which will add about 3.5 million shares of common stock to Corixa, is expected to close in September. Corixa reported 14.1 million shares outstanding on March 31.

The combined company's portfolio will have nine programs in clinical development, 15 in preclinical or discovery and six corporate partnerships focusing on cancer, infectious disease or autoimmune disease.

"There were a number of points that make this acquisition attractive," Burris said. "The first is Ribi's adjuvant products, including those for hepatitis B and herpes, that are near approval. Another was the manufacturing facility."

It is not surprising that Corixa acquired a company that would help it build critical mass in the vaccine arena. In April, it secured a $50 million equity-based credit line earmarked toward in-licensing and acquisitions. (See BioWorld Today, April 12, 1999, p. 1.)

Kris Dyszynski, director of licensing activities for Ribi, believes the deal makes sense for both companies. "It's a perfect marriage," he said. "It'll combine Corixa's antigen discovery and immunotherapeutic expertise with our adjuvant expertise. In addition, Corixa wants to increase the use of our manufacturing facility and one or more Corixa products will now be made here."

Interestingly, Corixa was less-than-excited about one of Ribi's lead products, Melacine, a whole-cell vaccine for melanoma. According to its press release, Steven Gillis, chairman and CEO of Seattle-based Corixa, said the company has "historically taken a cautious view toward such products. We will continue to evaluate Melacine's product potential going forward, basing such evaluation on data from ongoing clinical trials."

Melacine consists of lysed cells from two human melanoma cell lines with a broad array of melanoma antigens, combined with Ribi's Detox-adjuvant. Detox-adjuvant contains MPL (monophosphoryl lipid A) and mycobacterial cell wall skeleton, both of which stimulate the human immune system.

Melacine is now in two Phase III trials, for Stage 2 and Stage 4 melanoma, testing the vaccine against Intron A (interferon alpha-2b). A completed 1997 Phase III trial evaluated Melacine against chemotherapy in melanoma, and while the vaccine improved quality of life, it did not demonstrate a survival benefit. (See BioWorld Today, March 26, 1998, p. 1.; and May 21, 1997, p. 1.)

Results from both new melanoma trials should be released shortly. Currently Melacine is pending marketing approval in Canada.

Last year, Ribi sold worldwide Melacine marketing rights, except in Canada, to Schering-Plough Corp., of Madison, N.J., in a deal worth up to $30 million. Schering-Plough later acquired the Canadian rights. (See BioWorld Today, March 17, 1998, p. 1.)

"Melacine is a whole-cell vaccine that is not specific to any antigens, and historically that has not been effective," Burris said. "Melacine may be effective and get approved but that product was not the basis of our decision to merge. We saw the value of Ribi in its other attributes, not Melacine. We will, however, honor all of Ribi's commitments in regards to Melacine. If there's a product there, we will fulfill our obligations. We're not going to not market it."

Ribi's stock (NASDAQ:RIBI) closed Thursday at $1.75, down 3.13 cents. Corixa's stock (NASDAQ:CRXA) closed Thursday at $12.50, down $1.062.