By Randall Osborne
Hobbled by the failure in a Phase III trial of its lead compound, Procysteine, Transcend Therapeutics Inc. signed an $8 million merger deal under which it will be acquired by KeraVision Inc., which is focused on correcting vision.
"It's a purely financial transaction for [KeraVision]," said Nicholas Harvey, president and CEO of Cambridge, Mass.-based Transcend, which will end its drug-development efforts.
Stockholders of Transcend will receive shares of KeraVision stock equal to the amount of net cash as of the closing date, anticipated at $8 million, plus a premium of between 20 percent and 30 percent, depending on the price of KeraVision stock prior to closing of the merger, which is expected to close at the end of next year's first quarter, or early in the second, Harvey said.
As of Sept. 30, Transcend had 5,763,091 shares outstanding.
In May, the company halted a Phase III trial of Procysteine for acute respiratory distress syndrome, after preliminary analysis of data failed to explain a higher death rate among patients receiving the drug than among those receiving placebo. (See BioWorld Today, May 11, 1998, p. 1.)
"In the final data set, we were left with no explanation," Harvey said. "It remains a mystery."
Procysteine was designed to neutralize tissue-damaging toxic molecules, called reactive oxygen species (ROS), by delivering the amino acid cysteine into cells, thus boosting cellular production of glutathione, an ROS-neutralizing peptide.
Because Procysteine was administered intravenously or in the emergency room via catheter, it was believed to offer a much less invasive therapy than the current treatment, which consists of forcing highly-oxygenated air into the lungs through a tube inserted into a patient's nose or mouth.
Remaining Four Employees Laid Off
In the acquisition deal, Transcend's four remaining employees will not be retained. Fifty-one percent of stockholders have agreed to vote in favor of the merger.
KeraVision, of Fremont, Calif., develops non-laser vision correction products for low to moderate myopia (nearsightedness) and low to moderate hyperopia (farsightedness).
Transcend Therapeutics' stock (NASDAQ:TSND) closed Wednesday at $1.125, up $0.562. *