A year after forming the joint venture company, Nextran,to develop transgenic pig organs for xenotransplant tohumans, DNX Corp. Tuesday sold its 30 percentownership in the alliance for $18 million to its partner,Baxter Healthcare Corp.
Baxter, with an initial investment of $20 million, owned70 percent of Nextran when it was formed in August1994. DNX, of Raritan, N.J., contributed $2.5 million andthe genetic engineering technology to make pig organscompatible for human transplant. In addition, DNXprovided Nextran's laboratory facilities and office spacein Princeton, N.J.
Paul Schmitt, DNX's chairman, president and CEO, saidthe $18 million boosts his company's cash reserves to$22 million, giving it the financial strength to become afull-fledged contract research organization by expandingits U.S. and European preclinical services business toinclude clinical drug development.
In addition, DNX will retain a 3 percent royaltyagreement for blood substitute technology it licensed toBaxter with the formation of Nextran. The technologyinvolves producing human hemoglobin from transgenicpigs for use as a blood substitute.
DNX's preclinical services subsidiary, PharmakonResearch International Inc., of Waverly, Pa., generated$25 million in sales in 1994, Schmitt said. Thecompany's other main business, DNX TransgenicServices Group, which develops transgenic animalmodels for drug development, accounted for $1.5 millionin revenues last year.
Schmitt said DNX will use the money from the Nextransale to assist in acquiring an established clinical servicescompany. He said DNX has been talking with potentialtakeover targets for nine months and expects to negotiatea deal by the end of this year.
The sale of its stake in Nextran removes DNX from thexenotransplantation field. In paying DNX $18 million forits Nextran share, Schmitt said Baxter Healthcare, asubsidiary of Baxter International Inc., of Deerfield, Ill.,put a value of $60 million on DNX's xenotransplanttechnology.
John Logan, Nextran's vice president of research anddevelopment, said Baxter's move was based on theprogress of the xenotransplant program and Baxter'sdesire to assume full control.
"Baxter is happy with the technology and its progress andthey intend to take the research to completion," saidLogan, who came from DNX and will stay with Nextran.He added that no major changes in Nextran or itsprograms are planned.
Mary Thomas, a Baxter spokeswoman, said a new CEO,whose name will be announced later, has been selectedfor Nextran and he will be on the job next month.
Nextran's most advanced program is a Phase I clinicaltrial using transgenic pig livers to function ex vivo inplace of hepatitis patients' diseased livers until humanorgan donors are found. The study is the first of a two-step clinical development process leading to actualtransplant of transgenic pig livers into humans.
The transgenic pigs, bred in southeastern Ohio, aregenetically altered with human genes to prevent rejectionof their organs by people.
In addition to developing transgenic pig organs forxenotransplant, Nextran makes monitoring kits to identifycompatibility for human-to-human transplants and hasrights to an anti-CD3 humanized monoclonal antibody fortreatment of organ rejection.
Another Nextran program focusing on development ofanti-CD45 monoclonal antibodies to prevent kidneytransplant rejection was dropped earlier this year.
DNX's stock (NASDAQ:DNXX) closed Tuesdayunchanged at $3.88. Baxter (NYSE:BAX) ended the dayat $39.50, up 25 cents. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.