By Frances Bishopp
Alpha-Beta Technology Inc. has bought MycoTox Inc. for $3 million, merging MycoTox's anti-fungal research, drug screening business and rapid in vitro anti-fungal diagnostics with Alpha-Beta's anti-fungal program.
The acquisition follows a collaboration between the two companies signed in February 1997 designed to screen Alpha-Beta's small molecule carbohydrate compounds against MycoTox's library of anti-fungal targets. MycoTox's screening service, called MycoSelect, identifies anti-fungal activities against pathogenic fungi.
Under terms of the agreement, MycoTox shareholders will receive a $1 million up-front payment. An additional $2 million of common stock will be issued subject to future performance and time-based milestones.
Alpha-Beta's stock (NASDAQ: ABTI) closed Thursday at $9.687, down $0.188.
MycoTox, of Denver, will be merged into a wholly-owned subsidiary of Alpha-Beta, but will maintain operations in Denver. The company will retain all of its 10 employees.
The acquisition is expected to close within 30 days.
Alpha-Beta, of Worcester, Mass., develops pharmaceutical products composed of complex carbohydrates. The company's lead product, Betafectin PGG-glucan, is a carbohydrate immunotherapeutic currently in Phase III trials for infectious disease indications.
Alpha-Beta works with beta-glucans, spherical molecules found in yeast cell walls, William Romeo, director of finance at Alpha-Beta, told BioWorld Today.
"We use that molecule for our major product, Betafectin," Romeo said, "which is being developed for post-surgical infection in patients who are undergoing high-risk gastrointestinal surgery.
"The synergy here is we have done extensive work on yeast cell walls and MycoTox's technology is specifically focused on the cell-wall structure," Romeo said. "We both have very strong science looking at yeast cell walls."
MycoSelect's screens include several unprecedented targets to detect anti-fungal agents that inhibit essential steps in cell-wall biosynthesis. The cell wall is essential for fungi and is absent in the mammalian host, presenting an attractive target for legitimate drug candidates.
MycoSelect assays can screen synthetic or natural samples. Using light microscopy and transmission electron microscopy, fungal cells are examined to determine the effect of samples on the structure of cell organelles, with emphasis on the cell wall. Samples also are tested for mammalian cell toxicities through MycoSelect.
Besides MycoSelect, MycoTox has patents for fungal cell-wall specific whole-cell screens and Seamatin, an anti-fungal protein found in corn. A patent is pending for a gene encoding a fungal enzyme required for cell-wall assembly.
Rachel Leheny, an analyst with Hambrecht & Quist LLC, of New York, said the MycoTox acquisition was a good move for Alpha-Beta and indicates the company is thinking ahead of its product Betafectin, for which Phase III clinical trial results are due in June.
"It's nice to see a company thinking about their pipeline ahead of time," Leheny added.
The acquisition of MycoTox should increase Alpha-Beta's 1997 expenses by approximately $500,000, Romeo said.
Alpha-Beta's cash on hand, as of March 31, 1997, was approximately $33 million, Romeo added. *