By Randall Osborne

Just over a month after an appeals court upheld a decision against CellPro Inc. in a patent dispute over stem-cell selection technology, the battle has been even more firmly resolved — with one of CellPro's opponents, Nexell Therapeutics Inc., signing a letter of intent to buy its assets for $3 million in stock.

CellPro, of Bothell, Wash., is filing for bankruptcy.

"That's part of the process," said Richard Dunning, president and CEO of Wilmington, Del.-based Vimrx Pharmaceuticals Co., of which Nexell is a majority-owned subsidiary.

"[CellPro] had at least three shareholder lawsuits filed, and because of the 'willful infringement' aspect of the court decision, those are not trivial situations," Dunning added, explaining that the bankruptcy was necessary in order for Nexell to be protected from lawsuit fallout.

"[CellPro] understood that," he said. The company's stock (NASDAQ:CPRO) toppled 77 percent on Tuesday's news, closing at $0.063.

The assets, including intellectual property, patents, antibodies and related cell banks, research and licensed rights, will be purchased with $3 million in Vimrx stock.

Nexell will acquire no cash, accounts receivable, inventory or manufacturing facilities, and will take only limited CellPro liabilities, under the agreement that must be approved by the bankruptcy court.

The patent dispute pitted CellPro against Johns Hopkins University, Becton Dickinson and Co., and Baxter Healthcare Corp. Nexell is jointly owned with Vimrx by Baxter, the principal operating subsidiary of Baxter International Inc., of Deerfield, Ill.

Baxter has agreed to distribute CellPro's Ceprate kits for a limited time so patients and clinicians can get cell-selection technology while Nexell's pre-market approval application for its system is reviewed by the FDA.

"We tried to structure it so there would be no interruption in the U.S. market," Dunning said, adding the Nexell systems — called the Isolex 300 and Isolex 300I — already are approved in numerous European and other countries.

"That market will transition very rapidly to the U.S.," he said.

Last month, as a result of the appeals court's ruling, CellPro was ordered to pay $7 million in damages to the three parties and to stop selling its Ceprate SC Stem Cell Concentration System in the U.S., as soon as an alternative system licensed under the disputed patents wins FDA approval. (See BioWorld Today, Aug. 13, 1998, p. 1.)

Dunning said he expects Nexell's systems to be approved "in the next couple of months."

CellPro's Ceprate, the first such system to win FDA approval, selects and purifies cells and is used to replenish cancer patients' bone marrow, destroyed by chemotherapy and radiation. Before chemotherapy, the patient's bone marrow and/or peripheral blood is extracted and frozen. Stem cells are removed from it by collecting cells that bear the CD34 cell marker on their surfaces. The cells are then returned to the patient's body, where they reconstitute the immune system.

The Ceprate and Isolex systems "do essentially the same thing from a therapeutic perspective, but they do it in different ways," Dunning said. Unlike Ceprate, Isolex uses magnetic beads.

Dunning said Vimrx's and Baxter's decision to form Nexell and enter the stem-cell selection market was "made with the assumption we would have a competitor. The thing looks a lot more interesting to us now."

Vimrx's stock (NASDAQ:VMRX) closed Tuesday at $1.343, up $0.031. *

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