Centocor Inc. announced Wednesday the formation of a newcompany, Apollon Inc., to develop nucleic acid-basedpharmaceuticals for treating cancers, allergies and infectiousdiseases.
Centocor of Malvern, Pa., is throwing in with two venturecapital groups, DSV Partners IV of Princeton, N.J., andChancellor Capital Management Inc. of New York, to startApollon with an initial investment of $6.5 million. Thecompany's stock (NASDAQ:CNTO) closed up 75 cents at $13.75 ashare
Centocor is contributing proprietary technology and initiallytaking 33 percent ownership of Apollon. The remaining 67percent will be split between the two venture capital groupsand Apollon's management, according to Michael Wall,chairman of Centocor's executive committee.
Wall declined to identify specific product targets for Apollon orpredict when the new company's first products might reach themarket. But "Apollon has a clear program," he said. Centocorwill retain its primary focus on monoclonal antibodytechnology. Earlier this year, Centocor set its sites on peptide-based products and raised $84 million with Tocor II Inc., anR&D spinoff.
Tapping venture capital sources to fund Apollon should helpCentocor enter a new product area without shouldering the fullfinancial burden, Wall said. "We have had a policy in the pastof keeping our hand in new technology. This is a continuationof that effort."
Reducing the scope of Centocor's financial commitments becamea priority last April, when the FDA told the company to conductanother Phase III trial before Centoxin would be furtherconsidered for marketing approval. Centocor's stock went into atailspin, and Centocor announced plans to cut expenses andlook for alternative ways to fund product development.
By forming Apollon, "we are able to down-size the companywhile maintaining our research and development capability,"Wall said. "This is a perfect example of where, even thoughmoney is tight, we would take some funds to start a newcompany in order to maintain our R&D capability and ourposition in this industry. ... What's important here is that weare staying on top of the technology."
Apollon will be starting out with a 13-member staff, mostlydrawn from Centocor's ranks and led by Centocor co-founderVincent Zurawski, who becomes president and chief executiveofficer of the new company.
"Zurawski wanted his own separate company," Wall said. Hewill maintain research ties with Centocor, but sever hisconnections to Centocor management.
-- Steve Payne BioWorld Staff
(c) 1997 American Health Consultants. All rights reserved.