By Jim Shrine
Vimrx Pharmaceuticals Inc. is acquiring Baxter Healthcare Corp.'s minority interest in Nexell Therapeutics Inc. as part of a move to consolidate all its operations into Nexell.
The action, which will include changing Vimrx's name to Nexell and moving all operations to Nexell headquarters in Irvine, Calif., is designed to simplify the corporate structure and make it easier to understand for investors, as well as save money.
The focus at Wilmington, Del.-based Vimrx already is the cell therapy technology at Nexell, and 130 of the company's 142 employees work in Irvine.
"The core business and value is Nexell Therapeutics, which we're operating through a fairly complex structure," Vimrx President and CEO Richard Dunning told BioWorld Today. "We've done a lot of work promoting Nexell to clinicians, but you couldn't really promote it to shareholders because you can't buy [Nexell stock]. An alternative was to go public, but we didn't want to do that."
Vimrx and Baxter, of Deerfield, Ill., formed Nexell in June 1997 by combining Baxter's ex vivo cell separation and storage technology with the gene therapy and genomics expertise at Vimrx. Vimrx gained 80.5 percent interest in the company. In return for its contribution, Baxter got 11 million shares of Vimrx stock and Series A convertible preferred shares worth $66 million. (See BioWorld Today, June 16, 1997. p. 1.; and March 2, 1998, p. 1.)
Nexell's lead product, the Isolex cell selection system, was deemed approvable by the FDA earlier this month pending additional data on labeling and manufacturing. It is used to select and purify stem cells to replenish the bone marrow of cancer patients. (See BioWorld Today, Jan. 8, 1999, p. 1.)
Baxter will receive 3 million additional shares of Vimrx in exchange for its 19.5 percent stake in Nexell, as well as a seven-year warrant to purchase another 5.2 million shares at $1.15 each. Also, the companies agreed to convert the $66 million Series A stock at $2.75 per share.
Vimrx's stock (NASDAQ:VMRX) gained 6.25 cents per share Friday to close at $1.718. It has about 67.5 million shares outstanding.
Baxter now owns 16 percent of Vimrx, and 30 percent on a fully diluted basis. Accounting for future commitments and the consolidation at Vimrx, Baxter's ownership position in Vimrx is 40 percent on a fully diluted basis.
"Baxter is not wavering on its commitment," Dunning said, adding that Vimrx initiated this move. "That's important for our shareholders to understand. We just wanted a way to make Nexell the public entity.
"As Vimrx we were challenged, particularly with the environment for small-cap biotech companies, to get our story in front of people and have it attractive to them," he said. "One reason was the complexity of our structure. We're trying to focus and simplify it, and we think this accomplishes that. One of our objectives is to diversify the investor base and create research that will benefit us in terms of creating demand for securities."
The name change, securities exchange and alteration of Series A conversion terms need shareholder approval before becoming final. At that time Vimrx intends to change its stock symbol and begin an investor relations campaign.
That could happen around spring, perhaps in the same time period Vimrx hopes to get approval of its Isolex product.
Dunning said approval still hinges on inspection of various plants and a final agreement on labeling. Inspections have been scheduled at most plants, he said, and draft labeling is in the FDA's hands.
"We're trying to move aggressively to get those things done," he said. "It's a relatively straightforward process but unpredictable when it will wrap up." n