By Debbie Strickland
Under a just-finalized agreement, VIMRX Pharmaceuticals Inc. and Baxter Healthcare Corp.'s joint-venture cell therapy company will receive one-third more start-up cash than called for in the letter of intent signed in June.
Baxter Healthcare, the chief U.S. operating subsidiary of Deerfield, Ill.-based Baxter International Inc., had earlier pledged initial operating funds of $20 million, and VIMRX $10 million. (See BioWorld Today, June 16, 1997, p. 1.)
Now, in the finalized deal, Baxter has agreed to invest an additional $10 million in up-front cash, boosting the total launch kitty to $40 million.
The amended agreement raises the potential value of the deal to more than $130 million.
Other components include Baxter's acquisition of an equity stake in VIMRX consisting of $50 million in common shares and $40 million in preferred shares. The deal is scheduled to close in mid-December.
Assets of Baxter's immunotherapy division, whose 1996 sales total of $9 million is expected to double in the next two years, will be transferred into the new company, to be based in the division's former headquarters in Irvine, Calif.
VIMRX, of Wilmington, Del., owns 80 percent of the as-yet-unnamed company, while Baxter has 20 percent and an equity stake in VIMRX.
The venture will begin operations in 1998, with an initial focus on Baxter's ex vivo cell separation and storage device and VIMRX's gene therapy and genomics expertise.
An immunoselection-based cell separator, the Baxter device is already approved under the name Isolex for stem cell selection and storage in Europe, Argentina, Hong Kong, Israel, New Zealand and Singapore.
Isolex Still Awaiting FDA Approval
Isolex 300SA has been tested as a means of selecting and storing a patient's own blood stem cells prior to chemotherapy — which destroys them — and is under review by the FDA, along with regulatory authorities in Japan, Australia and Canada.
"We're optimistic about approval within a reasonable period . . . but if it is delayed, the [added cash] will provide some hedge," said Richard Dunning, VIMRX's president and CEO.
In July, the FDA's Biological Response Modifiers Advisory Committee voted 13-2, with one abstention, that use of the Isolex system does not substantially impair engraftment and yields a cell population effective for transplantation and engraftment. But only six committee members agreed that failure to impair engraftment should be considered evidence of efficacy. Five said it should not and five abstained.
The joint venture's start-up funding will also contribute to promotion of existing indications and to development of additional uses for the technology.
"Our next step, already under way, will be to develop an instrument system that permits automated, closed-system expansion of purified stem cells ex vivo by applying appropriate growth factors to provide larger quantities of desired cells," said David Jackson, chief scientific officer of VIMRX. "Once purified and expanded, these selected cells also can be genetically modified to provide additional therapeutic benefits."
The system could also be adapted to remove for storage or manipulation specific cell types other than stem cells. VIMRX is exploring gene-therapy applications.
Baxter, meanwhile, has rights to manufacturing, sales and distribution of the new company's cancer-related products, plus Baxter is the licenser of the CD34 antibody technology used for stem cell selection and will receive up to $21 million in milestones from the joint venture. In addition to Isolex, the new company will acquire several other cell therapy technologies: the MaxSep Cell Selection System, the CFU Stem Cell Kit, Epimet Tumor Detection Kit, Lifecell Tissue Culture flasks, the Cell Harvester Device, Solution Transfer Pump, Cell Wash Set and Cryocyte storage containers for freezing and storing blood components.
According to Baxter and VIMRX, future cell therapy indications include HIV/AIDS and other infectious diseases, blood disorders, genetic diseases, autoimmune and inflammatory diseases, solid organ transplantation, burns, and bone and cartilage repair.
Cell Separation Field Competitive
The venture could face competition from the outset. CellPro Inc., of Bothell, Wash., won FDA approval of its stem cell selection device in December 1996, and has applied for approval to use the Ceprate system for pre-chemotherapy selection of peripheral blood stem cells in patients with multiple myeloma, a "proof of principle" indication that could lead to broader off-label use.
"Peripheral blood is a much more desirable source of stem cells than bone marrow," said Jackson, noting, "Baxter already has the approval for peripheral blood stem cell selection in Europe, and that is the indication for which the instrumentation is before the FDA. The CellPro filing shows that's where they would like to go also. That's where Baxter already is."
Baxter and related parties this summer won a patent infringement suit that would remove CellPro's system from the market, but the ruling is under appeal. (See BioWorld Today, July 28, 1997, p. 1.)
In the field of stem cell expansion, both CellPro and Aastrom Biosciences Inc., of Ann Arbor, Mich., have patents covering ex vivo stem cell growth methods.
VIMRX's shares (NASDAQ:VMRX) closed Monday at $2.875, up $0.063. As of June 30, the company had $37 million in cash, following a net loss of $9.7 million in the first half of 1997. *