Pharmatec Inc. and Pharmos Corp., in the process of closing a$53 million merger, have entered into an option agreement toacquire Xenon Vision Inc.

The two companies, which are combining their drug deliverytechnologies, would acquire the developer of site-specificophthalmic drugs in an exchange of stock valued at about $8million.

If the option is exercised, shareholders of privately held Xenonwould receive 2 million shares of Pharmatec stock(NASDAQ:PHTC), which would be restricted from trading for 15months following the exercise.

The option was acquired for an initial $150,000 payment andcan be exercised through Oct. 31, subject to certain terms,including additional $30,000 payments per month startingApril 1.

The option is exercisable only if the previously announcedmerger between New York-based Pharmos and Pharmatec ofAlachua, Fla., is completed. New York investor David Blech hassignificant holdings in both companies.

Pharmatec closed unchanged Wednesday at $4.

Xenon's core technology is based on ophthalmic drugs that actat the site of administration in the eye. Once absorbed into thebloodstream, they are broken down by enzymes in the bloodplasma into inactive metabolites, said John Howes, vicepresident of development at the company.

The technology, which is covered by composition-of-matterpatents, is exclusively licensed for ophthalmic uses from theUniversity of Florida, where it was developed by Dr. NicholasBodor.

Xenon's lead compound is loteprednol etabonate, an anti-inflammatory steroid for treatment of giant papillaryconjunctivitis, an inflammatory condition common amongcontact lens wearers. The drug has completed Phase II trialsand will begin Phase III trials this summer if the companyreceives funding, Howes said.

The company, which also is based in Alachua, has a betablocker in Phase II trials to treat glaucoma. A third drug,alprenoxime, is inactive until placed in the eye, where it'sconverted by a simple enzymatic mechanism into a drug thatacts like a beta blocker, said Howes. That drug is ready to startPhase II trials when funding is completed.

Pharmatec is developing a redox dihydropyridine carrier thatcrosses the blood-brain barrier, where it slowly releasescompounds. That technology was also developed by Bodor. Thecompany is also developing Molecusol brand cyclodextrins forimproving the solubility, stability and delivery of drugs.

Privately held Pharmos is developing Sub-Micron Emulsiontechnology to build very small lipid particles encapsulatinglipophilic drugs. The company has an unnamed drugincorporating the technology in Phase I trials for an ophthalmicindication.

-- Karen Bernstein BioWorld Staff

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