Boston Life Sciences Inc. (BLSI) and GreenwichPharmaceuticals plan a "reverse merger" in whichGreenwich would be the surviving entity but BLSI wouldassume control of the new company.BLSI, a Waltham, Mass., company founded in October1992, is making the move in large part as a means of goingpublic. Greenwich, of Fort Washington, Pa., was set backbecause of recent clinical failures of its two leadcarbohydrate compounds for rheumatoid arthritis, and inMay laid off all but five of its 68 employees.Greenwich, which has about 35 million shares outstanding,will issue about 35 million new shares to investors in BLSI.The largest investor is the Castle Group Ltd. of New York,which handled the company's first-round private placementfinancing of $3 million that was announced in June 1993.Greenwich (NASDAQ:GRPI) stock, worth more than $15 afew years ago, gained 31 cents (124 percent) per shareThursday, closing at 56 cents in trading of 666,400 shares."After the merger, [BLSI] will own half the company,which hopefully has more than twice as much in assets andfuture potential," Jeff Randall, president and CEO ofGreenwich, told BioWorld. "We have a suite of patents,compounds in the clinic and preclinical compoundsdeveloped through screening algorithms. There's really nomaterial amount of property on either side."Greenwich reported net working capital of $5.4 million asof March 31, less the $1.9 million it paid to settle lawsuitsthat mostly were related to the company's public statementsabout Therafectin, which the FDA deemed not approvablefor rheumatoid arthritis. Greenwich's second drug, GW-80126, was determined in Phase II results released in Mayto be no better than placebo. A third compound is in Phase Itrials for the same indication.Randall said there is no present plan for Greenwichemployees to work with BLSI. The new company will keepthe BLSI name and location. Those getting new Greenwichshares will be restricted from selling them for anunspecified time, Randall said.George Eldridge, vice president, business development andfinance for BLSI, told BioWorld that his company has fiveemployees and doesn't own any manufacturing orlaboratory facilities. "Our emphasis has been to fundresearch through sponsored research agreements," he said.The company was founded by Marc Lanser, now presidentand CEO, primarily to develop and commercializetechnologies coming out of Harvard Medical School, itsaffiliated hospitals and other institutions in the area. EdsondeCastro is chairman of the board."For the Boston Life Sciences shareholders, it's atremendous benefit to have the additional technologiesbrought in," Eldridge said. "Secondarily, there is anopportunity to become a publicly traded entity, therebyincreasing the opportunities for raising additional capital."Eldridge said BLSI's board has approved the transaction,subject to certain conditions. The deal also is subject toapproval by Greenwich shareholders, effectiveness of aregistration statement regarding the Greenwich stock to beissued, and completion of due diligence by both parties.Randall estimated it would take 60 to 90 days.BLSI's efforts are focused on products to treat cancer,Parkinson's disease and autoimmune diseases. It isfocusing its research in four areas.A factor called cartilage-derived inhibitor, first discoveredat Harvard and MIT, is a glycoprotein produced bycartilage cells that BLSI officials said is a potent anti-angiogenesis factor. Eldridge said BLSI now is isolatingthe molecule and purifying it down to complete the cloningprocess.The company also is developing a new class of moleculesto diagnose and treat Parkinson's disease. The diagnosticappears as if it's able to quantify the number of dopaminetransporters in the brain using single emission tomographyscanning. Eldridge said toxicity work has begun and aninvestigational new drug application is expected to be filedin 1995.Research focus involves a monoclonal antibody-basedtumor targeting system for directing diagnostic andtherapeutic molecules to tumors while simultaneouslyminimizing non-specific binding and maximizing thenumber of molecules localized to the tumor. And to combatautoimmune diseases by controlling the MHC class II(histocompatibility) expression.As for the Greenwich compounds, "Our plan is to evaluatethose technologies with the same intensity and interest asour own technologies," Eldridge said. "We'll evaluate themmore fully after the transaction." n

-- Jim Shrine

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