By Jim Shrine
Lorus Therapeutics Inc. acquired Genesense Technologies Inc., another Canadian company with an oncology focus, for stock that was valued at about C$14 million (US$9.4 million) when the deal was being negotiated.
The value rose significantly Wednesday, however, as Lorus shares made large gains on markets in the U.S. and Canada, based on that news and a Tuesday presentation at the American Association of Cancer Research meeting in Philadelphia. Also, Toronto-based Lorus said it planned to raise C$20 million (US$13.4 million) in a public offering expected to close in July.
Lorus, formerly called Imutec Pharma Inc., is developing the immunotherapeutic cancer drug Virulizin and has clotrimazole analogues in its pipeline. The most developed products at Genesense, of Toronto, are antisense cancer drugs. Farther back in its pipeline is U-sense technology and a tumor-suppressing gene therapy approach.
¿We are determined to build the first Canadian company specialized in oncology,¿ Philippe Lacaille, chairman and CEO at the combined company, told BioWorld Today. ¿There are a lot of small companies in Canada with good technology, but not critical mass. The key to addressing cancer is to have a multi-angled attack. You want to have as many irons in the fire as possible. We want to build a portfolio with breadth and depth.¿
Lorus (NASDAQ:LORFF), which trades on the Montreal and Toronto exchanges under the symbol LOR, has about 42.7 million shares outstanding. Privately held Genesense is getting 36 million shares, which was estimated at 30 percent of Lorus after completion of the public offering. That percentage ownership would go up, if Lorus stock stays at the higher level.
Filing For Virulizin Expected In Fourth Quarter
Lorus¿ stock gained about 40 percent Wednesday on both the NASDAQ and Toronto exchanges, closing at 67 cents and 90 cents, respectively. About 4.26 million shares were traded on the Toronto exchange. Based on the NASDAQ price, the deal is worth about US$24 million.
The share price in Toronto was around 38 cents when the deal was being finalized.
¿We¿re the first in Canada to be proactive in consolidating oncology products, and the market is reacting very favorably,¿ Lacaille said. The move is expected to make it easier to raise money, he said, in the tough financing environment in Canada, particularly for micro-cap companies. ¿We want to become a hub to attract more technologies and capital.¿
Genesense was founded in October 1996 on oligonucleotide research conducted by Jim Wright and Aiping Young. They later licensed rights from the University of Manitoba and the Manitoba Cancer Treatment and Research Foundation.
Of the decision to be acquired by Lorus, Wright said, ¿We have the same vision, to try to develop unique cancer compounds. We also have some technologies that work against infectious diseases, but most of our focus is oncology. The focus of our companies is synergistic. When we put it all together, we¿re a stronger company than we are individually.¿
Lorus¿ Virulizin has been through Phase I/II trials in patients with advanced pancreatic cancer who had failed standard therapies. Seven of 19 evaluable patients achieved stable disease (the tumor did not grow), and one patient achieved a complete response. Patients had a median survival rate of 6.7 months.
Lorus intends to file for approval of Virulizin as a second-line, or salvage, therapy in Canada, based on that study and two other small trials, Lacaille said. Filing is expected in the fourth quarter. The strategy in the U.S. is to secure a partner and take the drug into pivotal studies as a first-line therapy, he said, adding that ¿serious discussions¿ are under way with potential partners. The protocol would involve Virulizin and gemcitabine against gemcitabine alone.
Genesense¿s lead compound, GTI 2040, has shown efficacy without toxicities against a range of human tumor types in mouse models. That product is expected to be taken into the clinic later this year. Behind that compound is GT 2501, which is in preclinical development.
Genesense coined the phrase ¿U-sense¿ to describe oligonucleotides that, when added to cells, will bind proteins involved in message stability, Wright said. As with antisense drugs, the idea is to prevent disease-related proteins from being made by acting at the messenger RNA level.
Meanwhile, Lorus officials plan to embark on a road show to promote their C$20 million public offering. The Toronto office of HSBC Securities Inc., which advised in the Genesense acquisition, has been retained to help in the offering.
¿It¿s a tough market out there. but we believe our strategy of building a cancer company is appealing to Canadian investors and should be appealing to American investors as well,¿ Lacaille said.
¿Going forward our first objective is to move our products through the pipeline,¿ he added. ¿However, this is the first [step] of a multi-step process, and we intend to move forward and continue to consolidate other products or technologies to ensure breadth and depth in our pipeline.¿