MONTREAL In September 1998, Algene Biotech nologies Corp., Canada¿s leading genomics company and the first to promote the use of founder populations for genetic research in complex human disorders, revealed that it was running out of cash. Along with staff layoffs and implementation of a budget reduction plan that lowers the monthly burn rate by one-third, the company said it would be restructuring its activities.
Michel Gosselin, vice president of administration and finance at Algene, told BioWorld International the pieces to support the company¿s new strategy are beginning to come together. As part of its turnaround, Algene is developing new areas of activity by adding the marketing of products and services, the application of its genetic discoveries and technology to pharmacogenomics, and the generation of targets for pharmaceutical products to its current gene discovery programs and technology platform.
Some of these programs will be fueled through alliances, and Algene has recently entered into a non-binding agreement in principle with Salt Lake City-based Myriad Genetics Inc., a major U.S. genomics company. Myriad will provide US$5 million of research funding in the form of convertible debentures issued quarterly over a three-year period based on milestone achievements. The debentures, bearing interest at an annual rate of 6 percent, are convertible at Myriad¿s option into Class B subordinate shares at the market price upon their issuance. At the end of three years, if the debentures have not been converted, they will be repaid at the option of Algene, either in cash or in exchange for acquired royalty rights.
Alzheimer¿s Alliance Under Discussion
In return, said Gosselin, Algene will invest in a genetic research program on three undisclosed disorders of interest to Myriad. Algene will assign the worldwide exclusive rights to the research results to Myriad in exchange for a share of commercial revenues in the form of royalties. The agreement is subject to certain conditions, including approval by regulatory authorities and the respective boards of directors as well as the execution of the definitive agreement by the parties.
Algene is also in discussions on another strategic alliance covering research into Alzheimer¿s disease. The company hopes to make an announcement about this next month.
In addition, the company has negotiated an agreement in principle for an investment of up to C$3 million (US$1.9 million), to be made by a group of investors including Montreal-based T2C2/BIO, an early-stage venture fund; Michael Dennis, president of BioSignal Inc., of Montreal; and Charles Sirois and Andre Tremblay, founding shareholders of Algene. Upon closing of these transactions, Dennis will be appointed chairman of the board and interim president and CEO of Algene.
According to Dennis, the immediate objectives will be to realize the alliances already under discussion; expand Algene¿s research and development program through the acquisition of intellectual property covering promising candidate genes in the areas of breast cancer and osteoporosis; and put into place a commercialization strategy for the company¿s technology portfolio.
Algene¿s research and development activities currently focus on causal and protective genes related to Alzheimer¿s disease and bipolar depression. n