LONDON ¿ Therapeutic Antibodies Inc. (TAB) is in merger discussions after a research deal with G.D. Searle & Co., the pharmaceutical division of St. Louis-based Monsanto Co., was cancelled, leaving the company with a looming cash crisis. TAB says it is pursuing ¿several corporate and financing strategies, including preliminary discussions which may lead to a merger on a share-exchange basis.¿ This will be at a value close to the current value of around 56 pence per share. TAB floated in 1996 at #5.25 (US$8.49) per share.

In November 1998, the company raised #7.5 million in a discounted placing, which it said would provide enough money to launch several products and bring it to the point where revenues would sustain ongoing development. Now, TAB says the termination of the Searle deal, for the development of two antibodies, means it will need more cash in mid-1999.

Andrew Heath, CEO of TAB, told BioWorld International the company is seeking a merger because this would make it easier to get funding for the company. ¿There are a number of significant imperatives to do this kind of deal,¿ he said. ¿Having a larger market capitalization makes financing easier. If you look at the capitalization of biotech stocks, the larger ones have grown, while the small ones are floundering. Getting the market cap up will ease the financing process.¿

However, he said the real reason for doing a merger, ¿has to be the fit between the two parties. The deal we are looking at is very compelling for both parties.¿

TAB is also looking at other routes to raise money including debt or equity financing, disposal of non-core investments, and third party licensing and collaboration deals.

TAB is based in the U.S., but listed in London, and is currently investigating the most cost effective method for transferring its headquarter operations to the U.K.

The company is expecting the launch of its CroTAb anti-venom product, designed to neutralize bites from poisonous North American snakes, by the third quarter of 1999. It also plans to submit a product license application for DigiTAb, designed to combat the effects of digoxin toxicity, by mid-1999. These two have been licensed to Altana Inc., of Hamburg, Germany, along with TriTAb, a polyclonal antibody product tailored to offset the effects of overdoses of tricyclic antidepressants, due to enter Phase II/III this year.

Financial constraints have forced TAB to put development of CryoTAb, for patients at risk of graft vs. host disease after bone marrow transplants, on hold. CryoTAb is a polyclonal antibody product that has been shown to be effective in neutralizing circulating tumor necrosis factor (TNF).

However, the company is starting new pilot studies to determine the feasibility of using CryoTAb in patients with Crohn¿s disease and those undergoing coronary artery bypass grafts, indications which TAB said have greater commercial potential in the short term. The company also expects the results of a Phase II study of CryoTAb in 100 patients with cerebral malaria, conducted in Bangkok, Thailand, by the middle of the year.

TAB ended 1998 with just under #5 million in cash, up from #3 million a year earlier. n