Biomira Inc., a Canadian cancer diagnostic and vaccinecompany, agreed Tuesday to issue 3 million shares toacquire New Jersey-based OncoTherapeutics Inc., whosedrug candidates include a liposomal interleukin-2, in adeal valued at more than $12 million.
Terms also call for Biomira, of Edmonton, Canada, toissue another 450,000 shares to stockholders of privatelyheld OncoTherapeutics, of Cranbury, N.J., if the twocompanies succeed in completing corporate partnershipnegotiations that were started by OncoTherapeutics. Thepotential collaborator was not identified, but anagreement is expected in six months.
The focus of the partnership talks is OncoTherapeu-tics'OncoCell, an ex vivo method of activating andmultiplying T lymphocytes for reinfusion to generate animmune response against cancers.
OncoCell, in Phase I/II trials for kidney cancer, is one oftwo oncology products targeted for corporate alliances.The other is OncoLipin, a liposomal form of interleukin-2(IL-2), which is entering Phase II studies for kidneycancer. OncoTherapeutics licensed rights to IL-2 for itsliposomes from Switzerland-based Roche Holdings Ltd.
The potential corporate alliances and OncoTherapeu-tics'product pipeline, which also includes a cancer diagnostic(OncoStep) and a vaccine (OncoVax), were identified askey elements of Biomira's decision to take over theseven-year-old OncoTherapeutics.
In addition, OncoTherapeutics' venture capitalists, whoinclude Princeton, N.J.-based Domain Associates, haveagreed to invest another $3 million to supportOncoTherapeutics programs for another year.
Based on the $4.06 closing price of Biomira's stock(NASDAQ:BIOMF) Tuesday, the takeover ofOncoTherapeu-tics is worth about $12.2 million plusanother $1.8 million on completion of the first corporatealliance. Biomira's stock ended the day down 25 cents.
Among Biomira's advantages for OncoTherapeuticsinstitutional investors is the Canadian company's cashresources. As of June 30, 1995, Biomira had $32.5million. Company officials Tuesday said the burn ratewas about $2 million per month. Biomira has 29.9million shares outstanding, not including those issued forOncoTherapeutics.
Biomira officials said they expect financing fromcorporate alliances, licensing agreements and $3 millionfrom OncoTherapeutics' shareholders to support the NewJersey company's current clinical programs.OncoTherapeutics, which will retain its name andcorporate offices, has a burn rate of about $200,000 permonth.
OncoStep, a diagnostic technology that monitors T cellsignal transduction to determine when patients are mostlikely to respond to immunotherapy, is another product inclinical trials. Biomira intends to sell OncoStep and itcould be on the market next year.
OncoVax, which uses liposomes in delivery of IL-2 andspecific cancer tumor antigens, is expected to enterclinical trials later this year. The vaccine initially istargeted for myeloma and leukemia.
Prior to Biomira's takeover, OncoTherapeutics had raisedabout $15 million since its founding in 1988. Officialssaid much of the company's scientific work, includingclinical trials, is conducted with the National CancerInstitute in Washington under cooperative research anddevelopment agreements.
In cancer diagnostics, Biomira's Tru-Scint ADmonoclonal antibody kit for detection of breast cancer isin Phase III trials in the U.S. The diagnostic also hascompleted Phase II studies in Germany and Canada. Thecompany's Tru-Scint SQ test for squamous cell cancersalso has completed Phase II testing.
Biomira's lead cancer vaccine, Theratope, uses an antigenfound in most cancer tumors and is in clinical trials forbreast, ovarian and colorectal cancers. Another vaccine,BP1-7, uses a MUC-1 peptide antigen, to stimulate animmune system attack and is in clinical studies for breastcancer.
Mike Longenecker, Biomira's senior vice president ofresearch and development, said the potential exists tocombine the technologies of the two companies to makeeach stronger.
For example, he said, using Biomira's synthetic peptideantigens with OncoLipin and OncoCell should enhance Tcell responses against cancer.
Biomira officials also said another attractive feature ofOncoTherapeutics is its liposomes for carrying cytokines,such as IL-2, directly to the cancer tumor, reducing thetoxicity of the proteins.
Scott Minick, OncoTherapeutics interim president andCEO, said the company's liposomes are "entirelydifferent" from those being developed by otherbiotechnology firms, such as Sequus PharmaceuticalsInc., of Menlo Park, Calif.
Minick, who has been hired by Sequus as president andchief operating officer, said OncoTherapeutics' patentedliposomal form of IL-2 is technology Sequus mayconsider licensing.
"Everybody said liposomes with proteins can't work,"Minick said, "but OncoTherapeutics proved that wrong."n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.