A recently discovered patent covering Alpha 1 Biomedicals Inc.'sintended use for thymosin beta 4 helped sink a merger that was in theworks and could portend further trouble for the company.

Alpha 1, of Bethesda, Md., said it is delaying development of thepeptide while it seeks a license to use thymosin beta 4. The patentholder was not disclosed. In the meantime the merger agreementbetween Alpha 1 and MicroBio Inc. was terminated.

MicroBio, or Alpha 1 Acquisition Corp., and publicly traded Alpha 1were contemplating a form of reverse merger in which Alpha 1 wouldbe the surviving company and MicroBio _ formed by the NewYork-based venture firm The Castle Group _ would get 24 millionto 39 million shares and own 73 to 81 percent of the combinedcompany.

Completion of the merger was contingent upon The Castle Groupproviding $5 million to $10 million. (See BioWorld Today, Sept. 14,1995, p.2.)

R.J. Lanham, Alpha 1's vice president and chief financial officer,said the recently discovered U.S. patent "has the effect of blockingAlpha 1's patent application for thymosin beta 4 for cysticfibrosis(CF). That had a negative impact on Alpha 1 AcquisitionCorp. raising the $5 million in financing.

"One of the reasons they were going to invest in this project wasbecause we had appeared to have a clear license to thymosin beta 4,"Lanham said.

The company said it is seeking other sources of financing fordevelopment of the peptide. "If additional financing cannot beobtained within four months at the latest, the company likely will beforced to substantially scale down or discontinue operations," it saidin a news release.

Thymosin beta 4, based on a peptide from thymic extract, affects thepolymerization of actin, the company said. Excess polymerized actinhas been linked to disorders such as CF, sepsis, asthma and chronicbronchitis. Last September Lanham said Alpha 1 intended within sixweeks to file a investigational new drug application to begin cysticfibrosis trials in humans.

Lanham said Alpha 1 had about $800,000 at the end of 1995. Thecompany has about 9 million shares outstanding. n

-- Jim Shrine

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