CALGARY, Alberta ¿ Synsorb Biotech Inc. is continuing to expand its drug development focus into new technological areas designed to capitalize on the company¿s core competencies. Its letter of agreement to acquire Oncolytics Biotech Inc., a biotechnology company founded on cancer research performed at the University of Calgary, represents the third deal that Synsorb has made during the past few months.

Oncolytics was formed by a University of Calgary research team comprising Patrick Lee, James Strong and Matthew Coffey to fully explore the potential of their discoveries.

In November, team members created a great deal of excitement in the research community when they published results of a study performed on the reovirus in Science. The scientists revealed that the naturally occurring human reovirus had been shown to selectively kill a wide variety of human cancer cell lines in mouse models. This research could provide new therapeutic opportunities for cancer patients.

In cancer cells, the Ras signaling pathway is highly activated, resulting in unrestricted cell growth. Activation of this pathway could be due to mutations in the Ras gene itself, or mutations in the elements upstream or downstream of Ras in the pathway. Direct mutations of Ras itself are prevalent in pancreatic cancer (90 percent), colorectal cancer (50 percent), lung carcinomas (40 percent), and myeloid leukemia (30 percent). Mutations of elements upstream of Ras are common in other cancers, such as breast cancer and glioblastoma. It is believed that at least half of all human cancers have an activated Ras signaling pathway.

The researchers discovered that reovirus selectively kills cells with an activated Ras pathway. Infection of a single cancer cell by a single reovirus particle can generate 1,000 progeny reovirus particles, which in turn infect neighboring cancer cells. This cycle continues until all cancer cells are eliminated. Normal cells are spared.

According to David Cox, president and CEO of Synsorb, the company¿s core competence in drug development makes a good fit to develop and commercialize this technology. Synsorb¿s experience in clinical development will prove invaluable as the company begins the process of obtaining regulatory approval to commence Phase I/II clinical trials on the reovirus in Calgary as soon as possible, Cox added.

Under the agreement, once approved by the regulatory authorities, Synsorb will acquire all of the outstanding shares of Oncolytics, with a share exchange valued at C$2.5 million (US$1.6 million) worth of Synsorb shares, resulting in less than four percent dilution. Additional payments to the existing shareholders at Oncolytics will be made upon completion of specific pre-determined milestones.

In December 1998, Synsorb disclosed it was acquiring one-third of the shares of GeneSense Technologies Inc., of Toronto, whose initial products are antisense oligonucleotides being developed as anticancer therapeutics. GeneSense has two drug candidates: GTI 2040 targets the R2 component of the enzyme ribonucleotide reductase (RNR), an enzyme that is essential for cell proliferation and known to be elevated in cancer cells; GTI 2501 targets the R1 component of RNR.

A second agreement was signed in January 1999 with Ocean Pharmaceuticals Inc. of White Rock, B.C., to develop novel antibiotic therapies for bacterial and fungal infections.

Synsorb is providing Ocean with financial and technical support to facilitate the development of new potential anti-microbial compounds to the preclinical stage. When Ocean has successfully completed animal model and early toxicology studies on its lead compounds, Synsorb will acquire the rights to these compounds and then complete preclinical studies and conduct clinical trials.

Currently, most antibiotics are derived from soil organisms, whereas Ocean has specialized in exploring marine sources of novel antibiotics. Thus far, the company has identified four new classes of compounds from marine microbes that show activity against a number of medically important bacteria and fungi. Synsorb expects that one or more of these compounds will be the first to be acquired under this agreement.

All of these agreements are in keeping with Synsorb¿s intention to broaden its strategic direction, Cox said. It continues the company¿s practice of acquiring or in-licensing all of their product development programs. Synsorb Biotech currently has two products in late stage clinical trials: Synsorb Pk for the treatment of verotoxigenic E. coli infections; and Synsorb Cd, designed to treat recurrent antibiotic-associated diarrhea.