CellPro Inc. will get $30 million from Corange International Ltd.,and all rights back from the companies' earlier agreements, as theyagreed in principle to end their collaboration in stem-cell diagnosticsand therapeutics.
Under terms of a December 1993 agreement, Corange was to havemade a $60 million equity investment, at $47.40 per share, in CellProby the end of last month. But Corange, which has changed its focussince the pact was signed, claimed last month that the agreement wasinvalid because it violated European antitrust laws. (See BioWorldToday, April 3-4, 1995, p. 1.)
The $30 million equity investment in CellPro essentially buysCorange out of the relationship. Corange, based in Bermuda withoffices in London, will get 1 million CellPro shares and non-exclusive access to CellPro's Ceprate system for its work in genetherapy.
Corange already paid CellPro $50 million in equity, at $43.09 pershare, and a $10 million signing fee. Another part of the deal,involving $110 million in potential milestones, also was terminated.
Richard Murdock, president and CEO of Bothell, Wash.-basedCellPro, said his company could have entered into a long fight withCorange over the $60 million. But he said a speedy end to the issuemade more sense.
"It gives us a quick resolution to a problem that has been on ourminds for a long time," Murdock said in a conference call Monday."It's fair to say the companies didn't agree on the future of [stem celltherapy]. It was important to get our rights back so we could moveahead with future alliances."
Corange and CellPro's collaboration involved a licensing agreementcovering diagnostics and one establishing a joint venture in stem-celltherapeutics. The diagnostics agreement gave Corange worldwiderights to products using CellPro's cell-selection technology. The jointventure in therapeutics involved development and marketing ofproducts outside North America, where CellPro kept rights.
Restructuring at Corange last year included the departure of certaintop-level officials who supported the work in stem cells. Murdocksaid CellPro will look quickly to get a partner in Japan and certainother areas, but is not in a hurry to align in Europe.
The $30 million investment from Corange leaves CellPro with about$95 million in cash and a burn rate expected to be about $25 millionper year. Its stock (NASDAQ:CPRO) gained $1.25 Monday to closeat $11.25, the same price it was trading at April 3, before Corange'sintention to challenge the agreement became public.
"The most important issue is it gives us the time to seek, in a rationalfashion, the right strategic corporate partner," Murdock said. "It willcertainly minimize the possibility that we will have to go out andraise money again."
CellPro's lead technology is its Ceprate SC stem cell concentrationsystem, which is designed to capture and purify rare cell populations.It targets CD34+ cells, and is on the market in Canada and in parts ofEurope. The FDA said in January that a U.S. application neededamending before it would be considered for approval.
Murdock said an amendment including additional data is beingprepared. That would be followed by a meeting with the FDA, and,hopefully, by the system being brought back into the review process,he said.
Still to be resolved are terms of the agreement in which CellPro willsupply Ceprate systems to Corange and the terms with whichCorange can sell the stock. Murdock earlier said CellPro didn't thinkthe deal violated European law, but said he will get detailedinformation about the issue before the company goes forward withother collaborations. n
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.