Khepri Pharmaceuticals Inc., a privately held South San Franciscocompany, has formed a Canadian subsidiary with public financingfrom the Quebec government to develop drugs from protease-basedtechnology.

"This is the first financing of its kind with these two Canadianinvestors and a U.S. biotechnology company," said Khepri'spresident and CEO, Ronald Henriksen.

The subsidiary, Khepri Canada, is a joint venture with the Caisse dedepot et placement du Quebec, which is responsible for investingQuebec's public pension and insurance funds, and Innovatech GrandMontreal, an economic development agency backed by the Quebecgovernment.

Khepri Pharmaceuticals contributed $1.4 million and will own 50percent of the new company. Caisse and Innovatech each paid $2.8million and will split ownership of the other 50 percent interestequally.

Khepri Canada, which will be headquartered in Montreal, will have atotal of $7 million in start-up financing and will guide KhepriPharmaceuticals' preclinical research activities involving proteasesand protease inhibitors. Proteases are enzymes involved in thebreakdown of proteins.

The financing, Henriksen said, will support Khepri Canada for fourto five years.

A secondary objective of the new company, said Sandra McNamara,Khepri's chief financial officer, will be for Khepri Canada to in-license other technology and support Canadian protease researchefforts.

Colin Bier, formerly president and CEO of a Montreal contractlaboratory, will head Khepri Canada as director general. Most of thecompany's preclinical development research will be conducted bycontract research organizations.

"What's unique about this," McNamara said, "is that Canada has seenvalue in biotechnology, but has never put money into a newly formedentity."

Khepri Pharmaceuticals is developing protease-based technology forcancer, asthma and arthritis. Establishment of a subsidiary in Canadais an extension of research Khepri has been conducting since 1993with scientists at the University of Montreal and the government-supported Biotechnology Research Institute in Montreal.

Founded in 1992, Khepri Pharmaceuticals has raised $22.8 million inventure capital financing. n

-- Charles Craig

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

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