SYDNEY — Pharmaceutical and biotech company Amrad Corp. Ltd. will pay about A$50 million in cash and Amrad shares to buy ICT Diagnostics Ltd., an Australian company that specializes in manufacturing rapid diagnostic kits for a range of diseases.
In addition, the Melbourne-based company has reported a better than expected after-tax profit of A$2.8 million for the half year ending Dec. 31, 1997, after booking a A$5.4 million profit from the disposal of a part of its pharmaceutical operations.
The profit also was achieved despite Amrad increasing its spending on biotech R&D by A$4 million to A$11.8 million, including money to spend on several ongoing trials.
One of the current trials is a Phase I study of AM424, a treatment for motor neuron disease and peripheral neuropathies (pains in extremities as a side effect of chemotherapy), now under way with 48 cancer patients undergoing chemotherapy at Western Hospital, in Melbourne.
As previously reported, Amrad recently completed a Phase I trial with 28 healthy volunteers in Britain. None of the participants reported side effects from the drug. (See BioWorld International, Jan 28, 1998, p. 2.)
Amrad Managing Director John Grace said the second trial is concerned with assessing toxicity and tolerable dose levels of the drug, with each patient receiving increasing doses. Initially each patient will be on the drug for one week, off for one week and then back on the drug for another two weeks.
Besides the AM424 trial, Amrad is conducting a Phase IIa trial on AM94, a potential vaccine for the prevention of rotavirus in children, with 52 out of a planned 60 children having been treated. The company also has an active research project on developing a new formulation of the short-acting, injectable anesthetic Propofol.
In addition to spending more on research and boosting revenue from existing operations by 34 percent to A$88.8 million for the last six months of 1997, Amrad has bolstered its operations by acquiring diagnostic kit manufacturer ICT Diagnostics.
Grace said ICT licensed technology to manufacture the kits in the form of small cards. The cards fold in half, with one side of the card containing the sample to be tested and the other side containing the reagent or biomaterial involved in the diagnosis. The opposing halves are squeezed together by the operator.
The tests are manufactured by methods similar to printing techniques and can be used in the field, in undeveloped countries, or by the bedside of patients in advanced countries. Tests for hepatitis B, malaria, tuberculosis and filariasis have been developed.
Grace said the ICT test uses diagnostic material produced by Amrad, and ICT requires skills in intellectual property and management possessed by Amrad to expand further, so there are considerable synergies in the acquisition. There also will be some sharing of research and development resources.
Among Amrad's other activities on behalf of ICT will be a search for a partner to market the diagnostic tests in advanced countries, Grace said.
Of the A$50 million to be paid for ICT, A$7 million will be in Amrad shares (now around A$2.44 each), with an unspecified amount paid in cash up front and the rest deferred and linked to performance goals of the newly acquired division.
Grace said the operation will represent a "small drag" on Amrad's profitability this year and will start to contribute to profitability the next.
Part of the sale price will be paid from the A$5.4 million profit resulting from the early termination of distribution arrangements for Pharmacia Biotech AB in Australia and New Zealand — a payment that also helped turn what would have been an operating loss of A$2.6 million for the half year into a profit.
Grace said fiscal results were still better than expected, especially since the company increased its spending on R&D by A$4 million during the half year, so the underlying operations were running at a profit.