In one of the largest biotech-biotech deals of the year, Britishcompany Chiroscience Group plc has agreed to purchase DarwinMolecular Corp. for about $120 million, a move that will mergeChiroscience's combinatorial chemistry and rational drug design withDarwin's genomics program.

"I see this as two, three-legged stools that have come together to forma six-legged table," Ronald Cape, co-founder and acting CEO ofDarwin, told BioWorld Today. "Our great strength is early researchgenetics information and Chiroscience has developed an excellentinfrastructure to bring products into the clinic for testing."

The deal will be funded through an issue of between 17.4 million and21.3 million new Chiroscience shares to Darwin shareholders,depending on the market price of Chiroscience's shares over the 10days ending Dec. 16.

"For every share a Darwin stockholder owns, he will get .3191percent of a Chiroscience share," a Chiroscience spokesperson said."In other words, if you have 1,000 shares of Darwin stock, you wouldreceive 319 shares of Chiroscience. Darwin shareholders coulddouble their investment."

The merger will give Darwin a 20 percent stake in the company andbring together some major players from both the business and scienceworld. Bill Gates, chairman and CEO of Microsoft Corp., and PaulAllen, co-founder of Microsoft, are both on the Darwin board, andcurrently own 14 percent of the company, making them Darwin'slargest investors.

Also a key attraction for Chiroscience is Leroy Hood, a pioneer in theautomation of protein and DNA sequencing synthesis and scientificco-founder of Darwin. Hood will become the chairman of thecombined company's scientific advisory board.

Chiroscience develops single isomer versions of selected racemicdrugs, which are expected to result in products with enhancedtherapeutic activity and/or reduced side effects relative to othercurrent therapies. It has developed a chiral template approach whichdesigns chemical compounds whose molecular structure selectivelyinteracts with appropriate biological targets.

Founded in 1992, Chiroscience originally focused on chiraltechnologies. Since that time, it has expanded into medicinalchemistry and drug discovery and currently has 11 products in thepipeline, some of which are in human trials and the remainder on theverge of entering them.

Chiroscience currently has two drugs in Phase IIItrials: levobupivacaine, a long-acting local anesthetic, and D3967, abreast cancer drug.

The company said plans are well advanced for the application for amarketing authorization for levobupivacaine. An obstetrics study,which began in May in the U.K., has recruited approximately onethird of 150 patients. Following a meeting with the FDA, studies inthe U.S. will soon be initiated. At least 15 trials will begin in theU.S., Europe, Australia and New Zealand over the next six months, inregional and epidural surgery, epidural Cesarean section and post-operative pain.

Data is expected from the Phase III trials on D3967 before the end ofthe year. A study in Norway has completed its dosing phase andresults from the Phase III studies in Poland and Czech Republic,where the expected reduction in side effects is being studied, shouldbe available by the middle of 1997.

Chiroscience floated on the London Stock Exchange in 1994 and iscurrently capitalized at 290 million. Chiroscience's firstdevelopment product, dexketoprofen, was launched in Spain by itspartner, Laboratorios Menarini, which later entered a co-marketingagreement with Eli Lilly & Co.

This year, Chiroscience and ViroPharma Inc., of Malvern, Pa.,collaborated on research aimed at finding compounds that blockreplication of RNA viruses.

Privately held Darwin, located in Bothell, Wash., researches geneticinformation to identify small organic molecules as therapeutics forautoimmune diseases, cancers and Alzheimer's disease.

Founded in 1991 with $3 million in seed money, Darwin made newsin 1994 when it reported that it had identified the first human geneknown to affect the aging process. The company said it haddiscovered the gene responsible for Werner's syndrome, a rareinherited disease that causes people to age twice as fast as normal. In1995, Darwin scientists identified a new gene that plays a key role inthe development of Alzheimer's disease.

In 1994, Darwin brought in $16.5 million in a Series A financing and$5 million from Rhone-Poulenc Rorer, of Collegeville, Pa., when itparticipated in Rhone-Poulenc Rorer's broad gene therapy andgenomics network, called RPR Gencell.

Combined, They Have $100M

Both companies, Cape said, came to the table "from a position ofstrength," and together should have well over $100 million in thebank.

Darwin just raised $30 million from a private placement in the springand felt the time was fortuitous to negotiate a merger, he said.

"We are delighted at Darwin," said Cape. "The vision that was therewhen Darwin was created, now has a more secure platform forgrowth. The dream will continue."

Current Chiroscience CEO, John Padfield, will serve as the CEO ofthe new company and will head up the newly combined staff ofapproximately 350; 246 will come from Chiroscience and 80 fromDarwin. Cape will join as a non-executive director and David Galas,chief scientific officer at Darwin, will join as an executive director.No layoffs are expected.

Synergies from this merger will provide for Chiroscience furthernovel drug discovery, a Chiroscience spokesperson said, and forDarwin greater expertise in bringing drug candidates through thedevelopment process.

Chiroscience's stock (LSE:CRO) closed Wednesday at 3.585 pence,an increase of 10 pence. n

-- Frances Bishopp

(c) 1997 American Health Consultants. All rights reserved.