Cellcor Inc., down to its last month of cash, couldn't find financing,so it agreed Friday to be acquired by Cytogen Corp. for stock valuedat $19.5 million based on Cytogen's closing price Friday.
Cytogen, of Princeton, N.J., said it intends to continue clinical trialsof Cellcor's autolymphocyte therapy (ALT), which is in Phase IIIstudies in metastatic kidney cancer patients. Part of the definitivemerger agreement calls for a subscription offering in which Cellcorshareholders could purchase up to $23.5 million of new Cytogenstock at $3.89 per share.
Cellcor's majority shareholder, Hillman Medical Ventures, ofHorsham, Pa., already has committed to purchase at least $12 millionin the subscription offering.
Cytogen's stock (NASDAQ:CYTO) closed at $4.375 Friday, down12.5 cents per share. It has about 30 million shares outstanding, andcould add as many as 10.5 million new shares with this deal.
Cellcor, of Newton, Mass., has 45 full-time employees and a 20,000-square-foot center that includes a cell processing facility. It had about$1.8 million in cash on March 31, and was spending about that muchper quarter.
"We were running out of cash and needed to put ourselves in aposition where the trials for ALT could be completed," HarryWilcox, Cellcor's senior vice president of business development andchief financial officer, told BioWorld. "We weren't able to raise thatcash independently. We tried all the traditional approaches [corporatepartnering, private financing, etc.] and just weren't able to raise thefunds we needed."
Wilcox said potential investors might have decided not to getinvolved because Cellcor's cellular therapy approach may have beenthe first to go before the FDA for approval, and there is concernwhen a new treatment method is under regulatory review.
Cytogen's OncoScint, a monoclonal antibody imaging agent used todetect colon and ovarian cancers, is approved in the U.S. and Europe.ProtaScint, an imaging agent for detection of prostate cancer, is underFDA review. And on Tuesday the company filed for FDA approvalof Quadramet, a radiopharmaceutical drug aimed at alleviating severepain associated with cancers that have metastasized in bone.
Pamela Murphy, vice president, corporate communications forPrinceton, N.J.-based Cytogen, said the company's expertise in thevarious development, regulatory and marketing areas allows it to bein a position to take advantage of the consolidation occurring in thebiotechnology and pharmaceutical industries. "We've been looking ata number of opportunities," she told BioWorld, "and this is the firstone that has come to a definitive agreement."
Cytogen reported having about $15.6 million in cash on March 31. Italso has filed a shelf registration for the sale of up to $11 million ofits stock to Nomura Securities International Inc., of New York. Theagreement allows Nomura, at its discretion, to purchase up to $49million in Cytogen stock in the next two years. Cytogen has beenspending around $7 million per quarter.
Cellcor's ALT involves activating a patient's own white blood cellsin vitro in the presence of a rich mixture of autologous cytokines andanti-CD3 monoclonal antibodies. Patients' cells then are sent toCellcor's cell processing facility for activation before being sent backto be infused into the patient.
Cellcor's ALT is being compared to alpha interferon in a Phase IIItrial in metastatic kidney cancer. Wilcox said 165 of 180 patientshave been enrolled, and accrual is expected to be completed in Julyor August. Results are expected a year after that, and positive datawould lead to regulatory filings, he said.
Cellcor also has a Phase III trial of ALT ongoing at 11 sites for non-metastatic kidney cancer, and a Phase I/II for chronic hepatitis B. APhase III trial begun in 1991 showed ALT extended survival ofkidney cancer patients, but didn't make clear the best maintenanceschedule. (See BioWorld Today, Nov. 7, 1994, p.1.)
Cytogen is committed to keeping the pivotal Phase III trial and thenon-metastatic kidney cancer trial going, Murphy said, and likely willkeep the hepatitis B study going. "Everything else will be evaluated,"she said.
Wilcox said, "Everyone [at Cellcor] feels good that the trial will becompleted and patients will eventually get access to this technology."
Wilcox said the only definitive word on Cellcor employees is that heand Richard D'Antoni, president and CEO, won't be part of the deal.Two Hillman representatives will be added to the Cytogen board,bringing it to nine members.
The specific terms of the deal call for Cellcor shareholder to receive.6 shares of Cytogen for each of the 5.5 million outstanding Cellcorshares, and 218.94 shares of Cytogen for each of the 5,250 preferredCellcor shares. Hillman, which has agreed to vote in favor of themerger, owns 50.5 percent of Cellcor's common stock and 95 percentof the preferred stock. n
-- Jim Shrine
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