Deals Shaping the Medical Industry (06/2003)

Summarizing the deals in the medical industry.

In Vitro Diagnostics

Acquisitions

Eurogentec SA

Epoch Biosciences Inc.

Eurogentec SA (oligonucleotide and peptide synthesis) has bought Epoch Biosciences' (molecular diagnostics) oligonucleotide business. (May)

Eurogentec gets the assets (including manufacturing equipment and inventory) and customer base in exchange for $1.4mm in cash. Epoch originally acquired the oligonucleotide business (for $2.6mm) to provide manufacturing services for probe products to its partner, Applied Biosystems, but this obligation has been eliminated since the agreement was updated. Epoch has sold the unit to focus on other segments such as the MGB Eclipse probe system business. Eurogentec and Epoch have also expanded a 2002 agreement for marketing Epoch's customized oligonucleotide products that include dyes and non-fluorescent quenchers. Instead of covering just Europe and Japan, it now includes North America.

Joint Arrangements

Abbott Laboratories Inc.

Applera Corp.

Applied Biosystems Group

Celera Diagnostics

Artus GMBH

Roche

Roche Diagnostics

Abbott Laboratories has agreed to perform worldwide marketing and distribution for German biotech company Artus's severe acute respiratory syndrome (SARS) diagnostic. (May)

The test--which is the first commercially available SARS diagnostic--was co-developed by Artus with Bernhard-Nocht-Institute for Tropical Medicine and is able to directly detect the coronavirus that causes SARS, producing results in only two hours. It was introduced in certain Asian and European countries last month and is currently being provided to labs and clinics under the supervision of the World Health Organization. Artus and Abbott intend to submit the test for FDA approval as soon as possible. Artus plans to continue manufacturing the test, which Abbott will initially market and distribute for use with Roche Diagnostics' LightCycler PCR analysis system in the US, Canada, Germany, UK, and Austria, where Artus has ongoing distribution agreements. Soon after, the test will be available worldwide for use with Applied Biosystems' ABI Prism 7000 sequence detection system; Abbott will handle marketing and distribution with the assistance of Celera Diagnostics (JV between Applera's ABI and Celera Genomics divisions) under a June 2002 agreement.

Abbott Laboratories Inc.

Promega Corp.

Promega Corp. (research products) will be Abbott Labs' manufacturing partner for a preparation system, based on Abbott's magnetic particle technology, that purifies patient samples and extracts the viral RNA from them. (May)

Abbott will handle distribution. The new extraction products will run in the m1000, a molecular diagnostics sample prep system that Abbott is launching later this year. The companies say a key issue for clinical labs is the ability to automate sample preparation at both low- and high-throughput. The Abbott/Promega products will allow customers to fully automate their viral load assays; as many as 96 samples can be processed, on a walk-away basis, in just a few hours.

Exact Sciences Inc.

Genzyme Corp.

Genzyme General

Genzyme Genetics

Exact Sciences (applied genomics) and Genzyme Genetics (genetic testing) have signed an alliance covering the royalty-free cross-licensing of 15 technology patents that can be used to develop diagnostic products and in diagnostic services for both businesses. (May)

The two companies will also work together on the development of molecular diagnostics for hematologic cancer, one area in which Genzyme focuses. It also provides genetic testing and counseling services for pre- and post-natal care, and reproductive and fertility treatments. Exact Sciences will use the patents to aid in the development of new generations of its PreGen-Plus DNA-based assay to detect colorectal cancer early.

Genetic Technologies Corp. Pty. Ltd.

Orchid BioSciences Inc.

Genomics company Genetic Technologies (GT) has licensed exclusive rights to Orchid BioSciences' (genotyping) SNP panels for paternity and forensic DNA testing services in Australia, New Zealand, and Southeast Asia. (May)

In those same territories, GT also gets the rights to sell Orchid's Elucigene kits--which include genetic tests for cystic fibrosis, eight genetic diseases common in the Ashkenazi Jewish population, Gaucher disease, hereditary hemochromatosis, and a thrombosis risk panel--plus nonexclusive rights to certain primer extension patents for diagnostics applications. In exchange, Orchid gets royalties on any revenues generated by GT (above certain sales thresholds) from the use of Orchid's SNP technologies. It also gets an option to GT's non-coding patents for SNP analysis plus legal clearance for any prior business activities that may have used these GT patents. Each company pays an up-front fee to the other.

Financings

Apogent Technologies Inc.

Apogent Technologies (develops laboratory and life science products for health care diagnostics and scientific research) has closed a private placement of $250mm in 6.5% senior subordinated notes dues 2013. (Jun.)

Apogent plans to use the proceeds to pay for shares of common stock it bought through a "Dutch auction" tender offer that recently expired. The tender offer allowed the company to buy up to 15mm shares of its common stock at between $15-17.50 each; it purchased just over 6mm shares (5.9% of its outstanding common shares) at $17.50 each, which totaled about $110mm including fees and expenses. Apogent may also use some of the money to repurchase more common shares in the future.

Pharmaceuticals

Acquisitions

Chiron Corp.

PowderJect Pharmaceuticals PLC

US pharmaceutical company Chiron agreed to acquire UK vaccine developer PowderJect Pharmaceuticals for an estimated £542mm ($878mm). (Jun.)

As of press time, Chiron had acquired 66.06mm PowderJect shares for a 71.9% interest in the company. The price per share varied from £5.45-5.50 (about $9 each). Chiron has until June 23 to buy an additional 3.75mm shares for a total ownership of 75.9%. PowderJect had fiscal 2003 revenues of £158mm ($250mm) and is the developer of Fluvirin, the UK's leading flu vaccine and one of only two flu vaccines approved in the US. The acquisition will give Chiron a stronger vaccine presence in the US, as its current flu vaccines (Fluad, Begrivac, and Aggripal S1) are prominent mainly in Europe. It will also give Chiron access to PowderJect's world-class European biologics manufacturing facilities. PowderJect's portfolio includes prophylactics for influenza, yellow fever, traveler's diarrhea and cholera, tuberculosis, polio, and tetanus. Based on its needle-free powder injection technology, PowderJect, it is also developing DNA vaccines that have the potential to treat hepatitis B, HIV, allergies, and cancer. The combined company will be the world's number two flu vaccine company. Interesting note: Chiron approached PowderJect with talks of an acquisition last year, offering £4.50 per share. PowderJect rejected the offer, and Chiron has been contemplating a new deal ever since. Should this deal not materialize, PowderJect will pay Chiron a break-up fee of £4.16mm ($6.7mm). Investment Banks/Advisors: UBS Warburg LLC (Chiron Corp.); Credit Suisse First Boston (PowderJect Pharmaceuticals PLC)

Protherics PLC

Enact Pharma PLC

Protherics PLC (specialty immunotherapies) will pay total consideration of £7.9mm ($12.64mm) for all the stock of the oncology biotech Enact Pharma PLC. (May)

For each 100 Enact shares, Protherics will give £17.05 in its convertible notes (totaling £7.2mm) plus 5.93 shares in New Opportunities Investment Trust. Enact had purchased the NOIT shares last fall, and Protherics will pay for these and distribute them to Enact shareholders. Enact's board supports the acquisition, since without some immediate source of near-term funding, the company would be forced to cut back its operations severely. Enact's lead product is Voraxaze, a rescue therapy to counteract kidney damage caused by the cancer drug methotrexate. It is already available in the US for compassionate use, and commercial launches in Europe and the US are expected in 2004 and early 2005. Voraxaze is a nice fit with Protherics' DigiFab, which fights the toxic effects of digoxin, a cardiology drug. Another Enact candidate is a selective tumor targeter that will commence clinical testing soon. Investment Banks/Advisors: WestLB Panmure (Protherics PLC); Beeson Gregory Ltd. (Enact Pharma PLC)

Tripep AB

Isconova AB

To support its current goal of consolidating with microbiology and immunology partners, Tripep AB (microbiology and immunology) will acquire Isconova AB (developing vaccines for human and veterinary indications) in exchange for 2mm of its shares valued at SEK6.4mm ($789k). (May)

Tripep will also pay Isconova shareholders 75% of the net profit from vaccines, but gets the option to buy back the profit right for SEK50mm ($6.3mm) in cash or shares. Isconova, which will become a wholly owned subsidiary of Tripep, has about SEK5mm ($629k) in cash. The company has used its Iscom and IscoMatrix technologies to create vaccines that are now in clinical development, including one for HIV and one for tuberculosis. A university in China recently contacted Isconova to potentially use its technologies to develop a vaccine for severe acute respiratory syndrome (SARS).

Joint Arrangements

Advanced Life Sciences Inc.

Argonne National Laboratory

Advanced Life Sciences (develops drugs for infectious diseases, cancer, and inflammation) licensed exclusive worldwide rights to develop Argonne National Laboratory's ALS-499 for several diseases, including Alzheimer's and Type II diabetes. (May)

ALS also gets an exclusive worldwide license to Argonne's proteomic technology. ALS-499--which was first identified through a previous collaboration between the company and Argonne--has shown its effectiveness in inhibiting amyloid protein aggregation, a trait associated with both Alzheimer's disease and Type II diabetes. The compound is able to bind to the exposed part of the protein and prevent interactions between protein molecules required for fibril formation. ALS plans to move the compound into early-stage laboratory studies immediately and hopes to bring it into the clinic within a few years. The company believes that the licensed technology will both enhance its portfolio of inflammatory drugs and enable it to develop additional compounds for other diseases.

Amarin Corp. PLC

Ivax Corp.

Eli Lilly & Co.

Amarin Corp. PLC (pain management and neurology therapeutics) has settled its litigation against Ivax (branded and generic drugs) regarding two US patents relating to Permax (pergolide mesylate), a dopamine receptor agonist originally developed and owned by Eli Lilly. Permax is used as an adjunctive therapy for Parkinson's disease. (May)

Under the terms of the settlement, Ivax gets a nonexclusive US sublicense--beginning in September 2003 and extending over the life of the patents--that enables the company to market a generic version of the drug. In exchange, Amarin gets royalties (to be shared with Lilly) based on Ivax's first six months' gross profit from sales of any pergolide products. Amarin sublicensed exclusive US rights to Lilly's Permax patents in 2001 when it obtained rights to the tablet formulation of the drug from Elan, which had previously licensed the agonist from Lilly in 1993 (it was Elan that originally filed the suit against Ivax). In May 2002, Amarin exercised its option under the Elan deal to become the exclusive US licensee for Permax (formerly marketed in the US by Elan's Athena Neurosciences subsidiary). Amarin sells the drug in the US through its Amarin Pharmaceuticals subsidiary, which has a 24-person sales force.

Amgen Inc.

Tularik Inc.

Tularik and Amgen will work together on the discovery, development and marketing of oncology therapeutics over a five-year period. Amgen will initially choose development projects from Tularik's targets but expects to expand beyond these 30 amplified oncogenes. (May)

Amgen gets exclusive worldwide rights to resulting products; Tularik keeps the option to co-promote certain products in the US. Amgen has committed $125mm in pre-marketing cash: $50mm in research funding ($10mm annually); $35mm of common stock at $10 per share (at a 65% premium), and will purchase another $40mm in shares at the market price over the next three years. Tularik will also get up to $21mm in preclinical, clinical, and regulatory milestones per target and royalties (analysts say in the high single digits). At least 80 researchers from both companies will be devoted to the research. Separately, Amgen has bought out ZKB Pharma Vision AG's 9mm Tularik shares, but will not acquire any additional shares without the Tularik board's approval. Altogether, Amgen now owns 21.3% of Tularik. Tularik's products include Phase III T67 for hepatocellular carcinoma (HCC); Phase II T607 for HCC, ovarian, gastric, and esophageal cancer; Phase I T487 for inflammatory diseases; and Phase I T131 to treat Type II diabetes.

Amrad Corp. Ltd.

Medarex Inc.

Medarex (antibodies) will use its UltiMAb human antibody development system to generate MAbs to interleukin-13 receptor alpha, a target of interest to Amrad (allergies and inflammation). The two companies will then research and develop the antibodies to treat asthma. (May)

Medarex will get license fees, milestones, and royalties for its work with the fully human therapeutic antibodies. Amrad discovered the receptor while performing research with the Cooperative Research Centre for Cellular Growth Factors. The company's other drug candidates include AM132 and AM133 for cardiovascular disease; AM336 for severe pain; and AM36 for stroke. Amrad signed an agreement earlier this month enabling Serono to exclusively market its emfilermin for infertility indications.

Arriani Pharmaceuticals SA

Viragen Inc.

Greek company Arriani Pharmaceuticals SA received exclusive rights to distribute Viragen's (develops natural and recombinant proteins to treat viral and malignant diseases) natural human alpha interferon Multiferon in Greece and certain other Balkan countries. (May)

The deal, subject to regulatory approvals, is said to be worth about $9.5mm based on potential sales revenues over the first five years. Arriani is filing for approval of Multiferon in Greece, Cyprus, and Slovenia and plans to also distribute the product in Bulgaria and Croatia, where approval is currently pending. In Greece, Multiferon will be offered under what is called a "Named Patient" program, in which doctors are allowed to issue specific patients a prescription for the drug even though it is not already approved. The drug, derived from white blood cells, has shown its effectiveness as a first- or second-line therapy for chronic hepatitis C and certain cancers including leukemias and malignant melanoma, and offers an alternative to recombinant interferon treatments.

Aventis SA

Aventis Pasteur Inc.

Vivalis

Aventis's vaccine business Aventis Pasteur Inc. seeks to improve large-scale production of several HIV and cancer vaccine candidates by combining its ALVAC viral vector system, which is derived from the canarypox virus, with Vivalis's proprietary avian stem cell platform. (May)

Under the agreement, Vivalis receives an up-front payment, milestones, and royalties. Aventis gets an option to use Vivalis's stem cell lines to produce an additional vaccine for an undisclosed virus. The Vivalis technology, which is in early development, is based on the use of embryonic stem cells to produce homologous recombinant vectors. It offers the ability to control the cell's stability, karyotype, and expression, and has applications in the conservation and amplification of cell banks as well as in protein purification. The technology has been applied to the production of therapeutic recombinant proteins such as antibodies, peptides, and cytokines in transgenic chicken eggs. Aventis says it has several candidate vaccines advancing into clinical development which are based on ALVAC, and the company hopes to use Vivalis's technology to produce complex therapeutic proteins on a large scale. Aventis is currently testing ALVAC in clinical trials with colorectal cancer patients and in preclinical studies for breast cancer. Although ALVAC can infect human cells, it cannot divide or grow in them, so it does not pose a threat.

Avidex Ltd.

Cyprotex PLC

Cyprotex (pharmacokinetics) and Avidex (spun out from Oxford University in 1999; T cell receptor modulation) have entered into an agreement to optimize a drug candidate that blocks T cell activation in patients with cancer and autoimmune disorders. (May)

Cyprotex will apply its ADMET technologies to a preclinical small-molecule compound Avidex licensed from Active Biotech in 2002. It stops T cell activation by blocking the interaction of CD80 with CD28 (both costimulatory pathways involved in T cell proliferation), thereby suppressing damaging immune responses in autoimmune and other disorders.

Bayer AG

GW Pharmaceuticals PLC

In its first commercial collaboration, GW Pharmaceuticals PLC, a company developing drugs derived from cannabis, licensed Bayer exclusive UK marketing rights to its sublingual cannabis extract spray. The candidate, in regulatory review to treat neuropathic pain and symptoms of multiple sclerosis, will be sold by prescription in the UK under the brandname Sativex. (May)

GWP, which will supply the drug to Bayer, gets an up-front payment and up to £25mm ($40.9mm) in regulatory milestones, most of which it will get upon approval in the UK for the licensed indications. In addition, GWP is entitled to more than a 40% share in net sales. To support the product's launch, GWP has an option to borrow from Bayer £10mm of the total milestones, but if the candidate gets approved, Bayer could convert the loan into either a milestone payment or GWP shares at a premium to market. Bayer also gets a time-limited option to negotiate marketing rights in other countries (some in the EU, others in selected territories throughout the world); if it exercises the option, GWP gets additional milestones determined on a country-by-country basis. Sativex is a whole-plant medicinal cannabis extract that mostly contains tetranabinex (tetrahydrocannabinol) and nabidiolex (cannabidiol). Outside MS, it is also in Phase III for cancer pain; if it receives approval, Bayer will sell the drug for this indication as well.

Biofrontera Pharmaceuticals GMBH

Schering AG

Biofrontera Pharmaceuticals GMBH (drug discovery for nervous system disorders) and Schering AG are collaborating to discover and develop stroke therapeutics, using Biofrontera's Digital Expression Pattern Display (DEPD) gene expression monitoring technology. (May)

Biofrontera gets milestones (that could reach several million Euros) and royalties. It will use DEPD to study the progression of events following an artificially induced stroke in animals, and is responsible for identifying and validating drug targets. The companies will then collaborate to discover and develop drug candidates against those targets. DEPD is an automated rapid PCR screening test that Biofrontera says can detect more than 98% of all genes expressed in any tissue, and therefore can provide an overall picture of gene activity that is much more complete than those provided by other methods.

Biota Holdings Ltd.

Sankyo Co. Ltd.

Biota Holdings (therapeutics for respiratory infections) and Sankyo Co. Ltd. have signed a letter of intent (with a 90-day negotiation period) to collaborate on Biota's second-generation influenza antiviral Flunet and a Sankyo compound. (May)

The companies would pool their long-acting neuraminidase inhibitor (LANI) pipelines and cross-license related IP, including Biota's preclinical Flunet compounds and Sankyo's LANI compound, which has completed Phase I clinical testing and may enter Phase II in 2004. They would offer the combination to development and commercialization partners (which would be responsible for funding continued clinical trials) and equally share licensing and royalty revenues. Flunet is a single-dose weekly influenza treatment (as compared to twice daily for five days for current neuraminidase inhibitors) that is designed for both therapeutic and prophylactic use.

Biovail Corp.

Wyeth

Biovail Corp. (large, integrated Canadian biotech that specializes in delivery formulations and sells both its own and in-licensed products) will pay $130mm for the US rights to two of Wyeth's marketed oral drugs. (Jun.)

The products are Ativan (lorzepam), an anxiety treatment, and Isordil (isosorbide dinitrate), a vasodilator used to prevent angina. Their combined US sales were over $50mm in 2002. Biovail thinks it can substantially increase the market opportunity for Ativan with new formulations and potential new indications. Biovail has licensed the data and technical know-how for producing a sublingual version that is already sold in Canada, and it is also considering its easily administered FlashDose formulation for the compound. In addition to the acquisition fee, Biovail will make annual payments to Wyeth under a three-year supply agreement. If Biovail accomplishes any line extensions for the anxiety product, it will pay Wyeth a milestone and sales royalties.

British Biotech PLC

MerLion Pharmaceuticals Pte. Ltd.

In a two-year agreement, British Biotech PLC (matrix metalloproteinase inhibitors, MMPIs) will use its ribosomal assays to identify and characterize lead candidates from MerLion Pharmaceuticals' (drugs from natural sources) extensive natural product libraries to develop antibacterial ribosomal inhibitors. (May)

The companies will jointly take lead compounds through preclinical development and share resulting IP. The deal is supported by BB's knowledge in ribosomal biology and structure-based drug design that includes site-specific assays, crystallography, and the high-resolution NMR technology it got when it acquired RiboTargets in March 2003. BB has a metalloenzyme antibacterial program that includes peptide deformylase and gram-positive selective inhibitors. MerLion has expertise in developing targets into reproducible, high-throughput screens in miniaturized assay formats.

Cambridge Antibody Technology Group PLC

Chromos Molecular Systems Inc.

Chromos Molecular Systems (artificial chromosome expression technology) has licensed nonexclusive rights to Cambridge Antibody Technology PLC (monoclonal antibody drug discovery) for the use of its ACE system in the development of protein-expressing cell lines. (May)

CAT will use the lines to commercially manufacture monoclonal antibodies for its therapeutic programs and has the right to market resulting products. In return for access to the system, Chromos gets an up-front payment, annual fees, milestones, and royalties. CAT says the system will complement its own phage display platform, which it uses to create antibody libraries for molecule isolation and drug discovery. ACE is a gene expression technology that transports genes to the nucleus of cells to produce proteins. This deal is Chromos's first licensing agreement involving cellular protein expression.

Cellegy Pharmaceuticals Inc.

Neopharm Ltd.

Israeli company Neopharm Ltd. (markets branded pharmaceuticals) will exclusively market Cellegy Pharmaceuticals' (topical and transdermal drug delivery) Tostrex testosterone gel in Israel. (May)

Neopharm will file for approval of the drug in Israel using existing regulatory material already obtained by Cellegy. Tostrex is awaiting marketing approval in the US (under the name Fortigel) later this year, and in Europe and Israel by early 2004. It is a transdermal treatment (testosterone applied in a metered-dose gel form to the inner thigh) for male hypogonadism, a hormonal deficiency that affects about 50k men in Israel. The condition is characterized by the diminished production of testosterone and is responsible for symptoms ranging from decreased libido and depressed mood and erectile function to diminished bone mass and mental alertness. Late last year, Cellegy partnered with PDI Inc. for US marketing; this agreement with Neopharm gives Cellegy its first presence outside of North America and Europe.

CyDex Inc.

Taisho Pharmaceutical Co. Ltd.

Drug delivery company CyDex has licensed Taisho Pharmaceutical worldwide rights to use its Captisol delivery technology for an intravenous formulation of TS-011, a compound the Japanese company is developing to treat stroke. (May)

Taisho currently has TS-011 in preclinical studies and plans to start Phase I trials later this year. Captisol is a patent-protected modified cyclodextrin with a chemical structure designed to improve the stability, solubility, and bioavailability of water-insoluble drugs forming a Captisol-drug combination. Upon IV administration, the complex is transported into the patient's bloodstream, where Captisol and the drug rapidly separate, allowing for full solubility. CyDex says the technology improves upon traditional delivery systems, which use a combination of organic solvents, surfactants, and extreme pH conditions that are often irritating to patients and may cause adverse reactions. Taisho will add the Captisol-enabled TS-011 to its pipeline of drugs in development for central nervous system disorders, diabetes, immunology and allergy, and infectious diseases.

CytImmune Sciences Inc.

OctoPlus BV

CytImmune Sciences (colloid gold for delivering cancer drugs) and OctoPlus BV (delivery technology and drug development services) will collaborate to develop a delivery mechanism that makes tumor necrosis factor (TNF) safer to use. (May)

In the past, the toxicity of TNF--an acknowledged cancer-killer--has limited its therapeutic use. The project will use CytImmune's technology that attaches the protein to colloidal gold (spherical nanoparticles in solution), which naturally targets solid tumors. Since the active ingredient goes straight to the tumor, a lower dose of TNF is needed. CytImmune has already conducted animal studies, and the partners expect the therapy to start human testing early in 2004, using TNF supplied by a third party.

Debio Group

Debiopharm SA

GenOdyssee SA

Swiss biotech Debiopharm SA has licensed exclusive rights to develop, commercialize, and manufacture a compound it picked from a group of five candidates offered by GenOdyssee SA (sells services based on its SNP discovery and genotyping platform and has put together a collection of therapeutic cytokines and growth factors). (Jun.)

The five available molecules were in cancer, oncology side effects, and virology. Debiopharm agrees to fund all preclinical and clinical development and the associated manufacturing. It pays GO an up-front fee, a milestone if the candidate reaches Phase III, and a share of revenues when it signs up a commercial partner. Debiopharm gets first rights on any additional indications for its molecule, and an option allows it to license a second candidate from GO under the same terms. GO's discovery approach is based on a portfolio of 80 natural cytokine and growth factor variants it says represents a sample of 85% of the world's population. They could have application in numerous fields--such as cancer, infection, viral disease, Alzheimer's, and MS--possibly with greater efficacy or fewer side effects than currently marketed treatments. The deal fits with Debiopharm's increased emphasis on proteins; the company is investigating a technology for delivery of macromolecules and plans a biotech manufacturing facility.

Egea Biosciences Inc.

Johnson & Johnson

Centocor Inc.

Egea Biosciences (protein based drugs and antibodies) will exclusively work with Johnson & Johnson's Centocor division on the discovery and development of a minimum of six optimized protein therapeutics. (May)

Egea will use its gene synthesis technology to produce candidates that Centocor can further develop, manufacture, and market. The technology enables quick engineering and optimization of proteins via high-throughput gene synthesis and rational protein design. The company has applied its technology in the development of drugs to treat cancer, heart disease, and immunology disorders. Egea uses its GeneWriter and Protein Programming technologies to create large protein libraries (that can be modified for certain properties) based on a natural protein sequence in about 2 days.

Eisai Co. Ltd.

Teva Pharmaceutical Industries Ltd.

Teva Neuroscience Inc.

Eisai will co-develop worldwide Teva Pharmaceutical Industries' (CNS therapeutics) rasagiline (TVP-1012), a drug candidate that is in Phase II studies for Alzheimer's disease and has recently completed Phase III trials for Parkinson's disease. (May)

Teva anticipates filing for North American and European approval of rasagiline later this year. Once approved, Teva Neuroscience and Eisai will co-promote the compound in the US for Parkinson's disease; H. Lundbeck AS already licensed European development and marketing rights to the drug in 1999. Rasagiline is a selective irreversible monoamine oxidase type B (MAO-B) inhibitor that was discovered by Teva and Israel's Technion Research and Development Foundation. Analysts predict that the drug could bring in sales of $12mm by the end of this year and $36mm in sales by 2008.

Eli Lilly & Co.

Neurogenetics Inc.

Neurogenetics Inc., a biotech that specializes in Alzheimer's and other neurodegenerative diseases, has licensed exclusive worldwide rights to continue development of an Eli Lilly AMPA/kainate receptor antagonist that has been tested in Phase II trials for several types of pain: migraine, chronic lower back pain, and spinal cord trauma. (May)

In earlier animal studies, the molecule had shown efficacy in a number of additional areas, including analgesia, anesthesia, epilepsy, and neuroprotection. Neurogenetics will pay an up-front fee, milestones, and sales royalties in return for the compound, its derivatives, and the associated know-how. Neurogenetics will take all responsibility for further clinical trials, regulatory filings, and marketing. Its rights allow it to sublicense to third parties, so it may choose to keep North America and find partners for other territories.

Enzon Pharmaceuticals Inc.

EsbaTech AG

Micromet AG

EsbaTech AG (drug discovery tools) has licensed worldwide nonexclusive rights to Enzon's and Micromet AG's (antibody-based therapeutics) combined single-chain antibody (SCA) patents. EsbaTech has given Micromet the option to use its fully human SCA frameworks in exchange for up-front and royalty payments. (May)

Micromet gets an up-front payment, annual maintenance fees, and milestones. EsbaTech revenues (raised with the use of the IP) will be split between Micromet and Enzon; the two companies jointly license out the use of their technologies based on an alliance they signed last year. EsbaTech will use the IP in its IMMUNA (Intrabody Manipulation for Multiple Novel Applications) technology and has the option to use single-chain antibodies in its development of pharmaceuticals. IMMUNA enables antibodies to be directly screened for cellular targets and allows them to be expressed in transgenic animals to knock out a certain function of a protein. IMMUNA-derived antibodies can be used in gene therapy or in the development of diagnostics.

Ercole BioTech Inc.

Isis Pharmaceuticals Inc.

Ercole BioTech (RNA-based technologies) and Isis Pharmaceuticals have signed a multi-year agreement in which they will jointly discover and develop antisense compounds that regulate alternative RNA splicing, a process in which cells move and put different segments of RNA together, ultimately causing or preventing human diseases. (May)

The companies will cross-license each other's splicing IP, paying the other preclinical, clinical, and marketing milestones, plus royalties. Ercole also gets a license to Isis antisense chemistry patents and Isis' Bcl-x preclinical antisense drug candidate. This antisense compound prevents the production of splice variants of the Bcl-x gene, which regulates apoptosis. Ercole will be responsible for clinical development and marketing of the compound, and provide Isis with milestones and royalties. Isis gets an equity stake in Ercole, in the form of convertible debt, and has the option to make a further investment. C. Frank Bennett, PhD, Isis' VP of antisense research, will serve on Ercole's board.

Fujisawa Pharmaceutical Co. Ltd.

Fujisawa Healthcare Inc.

GlaxoSmithKline PLC

GlaxoSmithKline Consumer Healthcare

Fujisawa Healthcare has enlisted the help of GlaxoSmithKline to co-promote its Protopic eczema ointment in the US. (Jun.)

In the multi-year agreement slated to start this July, Fujisawa will continue marketing to dermatologists, and GSK will use its own dedicated sales force to concentrate on pushing Protopic to pediatricians. GSK will be compensated based on its sales of the drug. Protopic is a topical immunomodulator designed to treat the symptoms of moderate to severe eczema. It can be used on any affected part of the body, including the face, neck, and hands, and, unlike other prescription treatments, is approved for use in children as young as two years of age. GSK will add the product to its line of dermatology brands which currently includes Abreva for cold sores, the Oxy line of products for the treatment/prevention of acne, and Zovirax, a topical antiviral for herpes.

Genentech Inc.

Plexxikon Inc.

Genentech and Plexxicon (structural genomics) entered a multi-year deal to develop and sell small-molecule therapeutics in the area of oncology. (May)

Plexxicon will apply its Scaffold-Based Drug Discovery platform to develop inhibitors against an undisclosed gene target implicated in cancer that's part of the protein kinase family. Genentech gets the option to exclusive worldwide development, manufacturing, and marketing rights to any of the resulting drug leads. Plexxicon gets an up-front fee, R&D payments, discovery and clinical milestones, and royalties on net sales. The company's Scaffold-Based Drug Discovery platform is designed to discover low molecular weight compounds, or scaffolds, that can be used as tractable chemical templates to produce lead drug candidates. The scaffolds can be chemically modified and made into lead compounds that bind to a specific target. Plexxicon's platform incorporates co-crystallography, informatics, and various chemistries.

Genicon Sciences Corp.

Inimex Pharmaceuticals Inc.

Inimex Pharmaceuticals (specializes in infectious disease drug discovery) licensed rights to Genicon Sciences' (develops, makes, and sells bioassay products) technology to further its own infectious disease drug discovery programs. (May)

Inimex will apply Genicon's RLS (Resonance Light Scattering) to its library of compounds that possess inherent immunity--a characteristic of certain immune system cells that are activated by the signaling molecules on bacteria, parasites, viruses, and fungi. RLS is a nonfluorescent ultra-sensitive gene signal generation and detection technology, which incorporates nanometer-sized metal colloidal particles used as detection labels for a variety of bioassays. Inimex's infectious drug discovery approach surmises that it is possible to selectively turn on the genes responsible for triggering an immune response. The company has isolated certain immune system cells and analyzed their gene expression patterns to that end. Inimex is setting up gene expression analysis labs for this collaboration at its British Columbian facilities and at the Vaccine and Infectious Diseases Organization in Saskatchewan; researchers from the Functional Pathogenomics of Mucosal Immunity Project (a $Cdn27mm program set up to discover anti-infectives) will assist Inimex with its work. Genicon gets the option to the rights for discoveries made in this deal related to host-pathogen gene expression data, which it intends to use to develop gene expression-based research tools and diagnostics (optimized for use with RLS).

GlaxoSmithKline PLC

Medivir AB

GlaxoSmithKline licensed exclusive worldwide rights (excluding certain Nordic countries) to Medivir's (develops drug candidates that suppress and regulate protease and polymerase functions) MIV-210, a compound in Phase I development for treating HIV. (May)

Medivir is retaining rights to the nucleoside analogue reverse transcriptase inhibitor in Denmark, Finland, Iceland, Norway, and Sweden. The company gets up to €86mm ($100.2mm), mostly for GSK's achievement of milestones, except for €6mm ($6.9mm) which was paid by GSK up front. Medivir also gets sales royalties. GSK is responsible for the clinical trials. Early studies of MIV-210 show that the compound may be active against strains of HIV that are now resistant to other nucleoside analogue reverse transcriptase inhibitors. This January GSK licensed worldwide rights to Ono Pharmaceutical's preclinical HIV candidate Ono-4128, a cellular chemokine receptor antagonist.

Guilford Pharmaceuticals Inc.

Pfizer Inc.

Pfizer licensed exclusive worldwide development and marketing rights from Guilford Pharmaceuticals (sells pharmaceuticals to hospital and neurology markets) to a class of compounds--NAALADase inhibitors--which have shown potential in Phase I trials as peripheral and central neurodegenerative disease therapeutics. The company is paying Guilford $15mm plus additional considerations for the rights. (May)

Pfizer pays $5mm of the $15mm up front, and the remaining $10mm by March 31, 2004, or earlier if a lead compound has been chosen for development. If the $10mm is not paid by the aforementioned date, Guilford may elect to reclaim the rights to the compounds and any data the partners have generated related to them. Pfizer will perform clinical development, manufacturing, and marketing. Guilford retains the rights to develop the NAALADase (N-acetylated-alpha-linked-acidic-dipeptidase) inhibitors for prostate cancer, head and spinal cord injuries, and drug addiction (areas Pfizer didn't choose to pursue), and Pfizer has the exclusive right to later acquire them. For each compound that successfully makes it to the market, Pfizer pays Guilford $42mm total in milestones. Should a marketed compound receive approval for an additional indication, Pfizer pays $20mm more. NAALADase is an enzyme that may have a role in the production of glutamate, a neural chemical messenger. The increased production of glutamate in patients suffering from acute injury or chronic neurodegenerative disorders is believed to trigger serious biochemical reactions that can be fatal.

Ilex Oncology Inc.

QuatRx Pharmaceuticals Co.

Ilex Oncology (anticancer drugs) licensed drug development company QuatRx Pharmaceuticals (founded December 2000; endocrine, metabolic, and cardiovascular disease therapeutics) exclusive worldwide rights to two classes of orally active compounds to treat lipid disorders. (May)

Ilex gets an up-front payment and milestones. The compounds, which have potential as single agents or in combination with currently available lipid-lowering drugs, alter levels of LDL-cholesterol, lipoprotein (a), and HDL-cholesterol. The first series is a new class of dual-action agents that reduce both LDL-cholesterol and lipoprotein (a), two known independent risk factors for cardiovascular disease. The most advanced in the collection, QRX-401, has completed preclinical testing and is expected to begin clinical testing in 2004. The second series is designed to elevate low levels of HDL (the "good" cholesterol) and is basically at the lead optimization stage, but has included some very early animal studies. A low serum level of HDL-cholesterol has been shown to significantly contribute to cardiovascular disease. Though global sales of lipid-regulating drugs are estimated to exceed $20bn annually, Ilex says it out-licensed the compounds because it wants to focus on its core cancer development programs.

InKine Pharmaceutical Co. Inc.

Paladin Labs Inc.

Canadian Paladin Labs (in-licenses and sells drugs) licensed exclusive Canadian rights to register and market InKine Pharmaceutical's (therapeutics for cancer and autoimmune diseases) flagship product Visicol, the first patented sodium phosphate purgative tablet approved in the US for bowel cleansing prior to colonoscopy. (May)

InKine gets an up-front license fee and royalties. Paladin will leverage its network of specialist physician relationships to sell the product in Canada and will take responsibility for all marketing and distribution costs. It says that Visicol (sodium phosphate monobasic monohydrate USP and sodium phosphate dibasic anhydrous USP) is a safe and effective alternative to liquid sodium phosphate and PEG formulations. InKine launched the product in the US in the beginning of 2001 and has completed Phase III clinical trials for constipation and for use with preoperative colonic surgical procedures such as sigmoidoscopy (in which a scope is used to view a section of the colon).

Innodia Inc.

Neurochem Inc.

In exchange for an undisclosed licensing fee, Canadian specialty pharmaceutical company Neurochem (focuses on CNS diseases) licensed to fellow Canadian biotech Innodia (diabetes therapeutics) the IP rights to its diabetes project, an anti-amyloid series of compounds--with ID 1567 as lead--designed to prevent the process of amyloid fibrillogenesis (a cause of cell dysfunction and death). (May)

Concurrently, Neurochem participated in Innodia's Series A financing with a $7mm investment, which together with the licensing fee, has given it a 31.1% stake in the company. ID 1567, an anti-amyloid approach to treating Type II diabetes, works by blocking the formation and deposition of toxic amyloid fibrils. It has potential for protecting the pancreas's insulin producing cells against the toxic effects of amyloid. Neurochem said the out-licensing would allow it to focus on its core area of CNS therapeutic development, including Fibrillex, presently in Phase II/III to treat the fatal disease secondary amyloidosis. Innodia has other preclinical diabetes therapeutic candidates, but it expects to initially move ID 1567 into the clinic, along with its lead ID 0101, an orally active compound that simultaneously increases insulin secretion while decreasing peripheral insulin resistance.

Ipsen

Spirogen Ltd.

The French pharmaceutical group Ipsen (just renamed; was Beaufour Ipsen) has licensed from Spirogen Ltd. (London biotech discovering DNA-interactive compounds against gene-mediated diseases) the exclusive worldwide rights to SJG-136, an antitumor agent. (May)

Ipsen also gets access to three gene targets as a platform for synthesizing and developing additional cancer candidates, plus a 20% stake in Spirogen. The UK firm's combinatorial chemistry platform produces large libraries of small molecules, then tries them against a fragment of DNA that contains a sequence of interest in order to rapidly identify agents that bind selectively to the target. The SJG-136 compound targets a group of six base pairs of DNA. It is in preclinical testing now with Cancer Research UK and the National Cancer Institute in animal models of brain, breast, ovarian, and colon tumors, and clinical trials are expected to begin this year in both the UK and the US. Spirogen was founded in 2001 and received its initial funding from Cambridge Research Bioventures, Xenva Ltd., CRIL, and Bloomsbury Bioseed Fund.

Juvaris BioTherapeutics Inc.

Valentis Inc.

Vaccines start-up Juvaris BioTherapeutics has taken nonexclusive rights to use Valentis Inc.'s plasmid backbone and cationic lipid delivery technologies for developing therapeutic vaccines. (May)

Juvaris will make an up-front payment and potentially provide milestones and sales royalties. It will take on all development, manufacturing, and commercialization costs and activities. The Valentis complexes, which are made of DNA plus lipids, have been in clinical trials as gene therapy treatments, but Juvaris will use them in vaccines, both alone--as a way to gear up the immune system--and as a delivery platform for antigens. Juvaris says it will benefit from Valentis's know-how and data about manufacturing and quality. Valentis plans to generate revenues by out-licensing its delivery technologies, meanwhile pursuing Phase II development of its lead candidate, a cardiovascular gene medicine for encouraging angiogenesis.

King Pharmaceuticals Inc.

SkyePharma PLC

SkyePharma will apply its oral drug delivery technology Geomatrix to King Pharmaceuticals' Altace (ramipril), an ACE inhibitor approved for hypertension, congestive heart failure following a heart attack, and the prevention of stroke, myocardial infarction, and death from cardiovascular events. (May)

SkyePharma gets $1mm up front, $6.5mm in milestones, and royalties on the net sales of any Altace formulation from the deal that gets FDA approval. King is responsible for development costs and regulatory submissions. SkyePharma's Geomatrix can control the amount, timing, and location of a compound's release. King expects that the platform will give its product improved bioavailability and an extended duration of action. Over the past year, Altace brought in $534mm in US and Puerto Rican sales. Under terms of an agreement signed in 2000, Wyeth co-promotes the product with King in those territories.

Lynx Therapeutics Inc.

Millennium Pharmaceuticals Inc.

Lynx Therapeutics (genomic analysis) will use its Massively Parallel Signature Sequencing platform in a project with Millennium Pharmaceuticals (personalized medicine) aimed at improving target discovery. (May)

First, Lynx scientists will use MPSS to identify cell-specific gene markers for an unidentified blood cell type, in hopes of learning about the genes involved in the body's process of specialized cell formation. In a second, pharmacogenomics study, the sequencer will look at how specific drug treatments affect RNA expression patterns in peripheral blood monocytes (circulating macrophages). Lynx says these projects will confirm how important gene expression profiling is to medicinal chemistry and prove MPSS's value in disease areas where few targets are known. The system has the capacity to supply digital data on all genes in a cell or tissue sample, including those that are not abundantly expressed.

Maxygen Inc.

Roche

Roche will help with the worldwide development and marketing of Maxygen's next-generation interferon alpha and beta variants. (May)

The companies will first work on therapeutics for hepatitis B and C. Roche has agreed to provide an up-front payment, complete R&D funding for the first two years, option fees, milestones, and royalties. Maxygen can opt for US co-development rights to any compound that Roche licenses, in exchange for profit sharing or a higher royalty rate. The companies may explore interferon therapeutics to treat cancer, and autoimmune, inflammatory, and infectious diseases (including HIV). Maxygen keeps the right to develop the products although Roche has the option for worldwide rights to the potential candidates. The companies estimate that Maxygen could receive at least $230mm, not including royalties. This agreement builds upon Roche's interest in interferon treatments; it has already developed and currently markets Pegasys and Copegus for hepatitis C. Worldwide interferon alpha sales exceeded $2.9bn for 2002.

Merck KGAA

Biovation Ltd.

Roche

Merck KGAA's Biovation (antibodies and proteins) division will use its DeImmunisation technology to generate compounds for Roche that treat chronic diseases. (May)

Roche will provide research money, license fees, milestones, and royalties. Biovation's DeImmunisation determines and removes the T cell epitopes from the molecule (and limits additional factors) that cause immunogenicity in antibodies and proteins. Roche's products in development include Phase II R744 for anemia; Phase I R1487 for rheumatoid arthritis; and Phase I R1438 and R1439 for Type II diabetes.

Peninsula Pharmaceuticals Inc.

Shionogi & Co. Ltd.

Peninsula Pharmaceuticals (in-licenses antimicrobials) licensed exclusive rights to develop and market Shionogi's doripenem (also named S-4661) in North America. (May)

Peninsula says the deal includes milestones, although further financial details were not disclosed. Shionogi will manufacture the product for worldwide distribution. Doripenem--Peninsula's first in-licensed compound--has completed Phase III trials in Japan as a broad-spectrum carbapenem antibiotic that demonstrates strong in vitro activity against aerobic, anaerobic, gram-positive, and gram-negative bacteria, including Pseudomonas aeruginosa, Staphylococcus aureus, and penicillin-resistant Streptococcus pneumoniae. The drug candidate works by interrupting bacterial cell wall synthesis, and has potential as a treatment for serious bacterial infections including severe urinary tract infections. Peninsula plans to immediately begin clinical development in North America and has the right to out-license doripenem to third parties. The market for the carbapenem class of antibiotics is currently an estimated $1bn and may double by 2006.

Pepscan Systems BV

PowderJect Pharmaceuticals PLC

Vaccines company PowderJect Pharmaceuticals PLC licensed Pepscan Systems BV's (develops immunotherapeutics based on peptides and their derivatives) lead product, a synthetic therapeutic peptide vaccine for prostate cancer that is currently in preclinical studies. (May)

Pepscan receives an up-front payment, milestones, and royalties. The company will finish preclinical development of the vaccine and bring it through Phase I, at which time PowderJect will handle further clinical trials and activities related to obtaining regulatory approval for the product, as well as marketing. Pepscan has already performed extensive preclinical studies and believes that the candidate may be better than currently available prostate cancer vaccines. The company uses its expertise in peptide and supramolecular chemistry together with its patent-protected technology to develop synthetic peptide antibodies that target the molecules that promote the growth and spread of tumors. It is estimated that by 2007, the market for prostate cancer therapeutics may reach $3.5bn.

Phytopharm PLC

Yamanouchi Pharmaceutical Co. Ltd.

Yamanouchi Pharmaceutical received an exclusive license from Phytopharm PLC (develops botanical pharmaceuticals) to develop, manufacture, and market PYM50028 for Alzheimer's disease in Japan and certain other territories in Asia. (May)

Yamanouchi also has the option to acquire rights to PYM50028 in the areas of Parkinson's disease, Lewy body dementia, vascular dementia, and mild cognitive impairment. If it exercises the option, Phytopharm is entitled to licensing fees, milestones, and royalties. In return for rights to the compound for the Alzheimer's disease indication, Yamanouchi pays £1.9mm ($3mm) up front, five milestone payments over the next two years totaling £10.6mm ($17mm), plus double-digit royalties on Japanese sales. Combined, these payments amount to an estimated £20.7mm ($33mm). Yamanouchi plans to finish Phase I development of PYM50028 for Alzheimer's and commence Phase II trials later this year, with completion by the end of 2004. Phytopharm will continue to develop the compound on its own in the territories not covered under the agreement. Both companies will share any resulting intellectual property, and Phytopharm retains its right to look for licensing opportunities for the drug candidate in other territories. In preclinical studies, PYM50028 showed promise as a neuroprotective agent that can potentially reverse the decrease of neuronal growth factors and neuronal degeneration that occur with aging. It is the first compound to be out-licensed from Phytopharm's P58 drug discovery platform.

T3 Therapeutics LLC

West Pharmaceutical Services Inc.

West Pharmaceutical Services (drug formulation) has agreed to help T3 Therapeutics (thyroid hormone therapies) with the development of an oral sustained release formulation of liothyronine (T3) for cardiovascular and endocrine diseases. (May)

Patients with congestive heart failure and hypothyroidism lack adequate levels of liothyronine (T3), the naturally occurring hormone produced by the thyroid gland; researchers believe that by increasing the hormone in the body, the two conditions may be alleviated. (The drug is currently taken only by hypothyroidism patients.) West's formulation technologies (including nasal delivery) have been used to control the release of drugs into the bloodstream. T3 Therapeutics holds a patent covering T3-based therapies that it says would benefit patients with CHF and hypothyroidism that are currently treated with T4.

Financings

Ariad Pharmaceuticals Inc.

Small-molecule drug developer Ariad Pharmaceuticals netted $9.45mm through the private placement of 4mm common shares priced at $2.50 each (an 8% discount to the market average) to the Riverview Group and Merlin Biomed. (May)

Rodman & Renshaw was the placement agent for the transaction. Ariad plans to use the proceeds for ongoing R&D efforts, clinical trials, and product manufacturing. The company is currently focusing on developing oncology drugs that regulate cell signaling with small molecules. It is planning Phase II studies for a T-cell immunotherapy candidate for treating graft-versus-host disease by selectively eliminating donor white blood cells following bone marrow transplants. Its AP23573 is in Phase I to treat solid tumors and other malignancies. Ariad's remaining candidates are in the preclinical and pre-IND stages, including AP23464 to stop the spread of cancer and treat certain forms of leukemia, and AP23841 for the treatment of bone metastases and primary bone cancers, such as osteogenic sarcomas. The company is also developing AP23573 for use in drug delivery stents to reduce reblockage of arteries after angioplasty and stenting.

Biokeys Pharmaceuticals Inc.

Biokeys Pharmaceuticals (HIV/AIDS and cancer therapeutics; formed by the merger of HIV/AIDS vaccine company BioQuest and anticancer therapeutic company Biokeys in May 2000) grossed over $2mm with a private placement of about 5mm common shares at $0.40 apiece (a 40% discount to market) to a group of institutional and accredited investors. The financing also included warrants to purchase just over 1.5mm of its common shares. (May)

Biokeys will use the money to begin a Phase Ib/IIa clinical trial for BlockAide, a viral entry inhibitor that was first identified and developed by scientists at the University of Texas MD Anderson Cancer Center for its anti-HIV properties, and licensed to Biokeys on an exclusive, worldwide basis. Without apparent toxicity, BlockAide has shown efficacy in reducing HIV viral load. Biokeys expects to file an IND for the candidate by August and begin the trial in September. It will also further its Phase II trial of CoFactor for first-line treatment of colorectal cancer and initiate a Phase Ib/IIa trial for EradicAide, an HIV vaccine candidate that shows potential for reducing HIV viral load to undetectable levels.

Biomira Inc.

In its second private placement since the end of April (when it raised $5.5mm), Canadian cancer vaccine company Biomira grossed $3.7mm with an offering of approximately 3.25mm common shares at $1.14 apiece (a 10% discount to market) and two-year warrants to buy (at an exercise price of $1.66 per share) 0.169 common shares for every one share of common stock purchased. (May)

Rodman & Renshaw was the placement agent for the financing. Biomira applies synthetic organic chemistry, biochemistry, and immunology to develop its vaccines, which it calls active specific immunotherapy agents because they are designed to induce specific immune responses to known tumor-associated antigens. Product candidates include its lead Theratope, in Phase III for metastatic breast cancer and Phase II for women with the same type of cancer who are also being treated with amatase inhibitors (a type of hormone therapy) and Faslodex (fulvestrant), an estrogen-receptor antagonist. The company also has a technology platform that it used to develop BLP25, a liposomal vaccine candidate in Phase IIb for non-small cell lung cancer.

Celgene Corp.

Celgene (small-molecule drugs for cancer and inflammatory diseases) brought in $400mm through the private placement of 5-year convertible notes to unnamed investors. The notes carry an interest rate of 1.75%, and are convertible into Celgene common stock at a conversion price of $48.45 per share. (May)

Celgene's lead product is Thalomid (thalidomide), approved as a treatment for cutaneous forms of erythema nodosum leprosum (ENL) in leprosy patients, and in Phase III trials for multiple myeloma, and metastatic and renal cell carcinoma. The company is working with Thalomid to develop new immunomodulatory drugs, IMiDs, and selective cytokine inhibitory drugs, SelCIDs, that are in Phase I and II trials to regulate the protein Tumor Necrosis Factor alpha (TNF-a) in cancer patients. Celgene also has Revimid (fast-tracked by the FDA) in Phase II and III trials for myelodysplastic syndrome and multiple myeloma, respectively.

Cerus Corp.

Cerus (blood inactivation technology for infection control) netted $54.3mm through a public offering of 6mm common shares priced at $9.63 per share, an 11% discount to the market average. (Jun.)

The company will use the proceeds to continue developmental work and clinical trials for its technologies that inactivate pathogens in the blood to make transfusions safer. Its main platform is Helinx, which consists of a family of small molecule compounds and prevents DNA and RNA replication by controlling viruses, bacteria, and white blood cells. Cerus is working with Baxter Healthcare on the Intercept blood system, which uses Helinx to inactivate the harmful materials in platelets, plasma, and red blood cells--all are involved in therapeutic blood transfusions. Intercept for platelets received CE Mark approval in Europe, and is currently in late-stage Phase III trials in the US. It is also in Phase III trials in the US for plasma and red blood cells. Cerus is exploring other uses for the Helinx technology, and currently has programs in Phase I trials using Helinx-treated T cells to improve bone marrow transplant outcome, as well as a Phase I cellular vaccine candidate for Epstein-Barr virus. Investment Banks/Advisors: Morgan Stanley & Co.

ChondroGene Ltd.

Canadian company ChondroGene (functional genomics) closed a $1.4mm ($Cdn2mm) private placement of 4mm common shares at $0.36 each (an 8% discount to the market average) to new and existing investors. (May)

The company has libraries of cartilage cell DNA, which it uses to develop treatments for osteoarthritis (OA). Its ChondroChip microarray contains thousands of cartilage-specific DNA elements and is used to identify gene expression patterns, biomarkers, and targets for OA diagnostics and "disease modifying" therapies. The company states that while current OA treatments focus on symptoms of the disease (for instance pain and inflammation--therapeutics such as anti-inflammatories, pain killers, and joint surgery), its own approach to the condition is to identify disease-responsible genes in different developmental stages in human cartilage, and alter the way they influence damage onset and progression in people with OA. Investment Banks/Advisors: Dundee Securities Corp.

Columbia Laboratories Inc.

Women's health and endocrinology therapeutics company Columbia Laboratories netted approximately $2.5mm through the private placement of common stock to Biotech Value Plus. The company sold 510k shares at a price of $4.90 per share, a slight discount to the market average. (May)

Columbia is developing drugs that use its Bioadhesive Delivery System, a technology based on the bioadhesion of a polymer and an active ingredient to the epithelium to deliver drugs. Columbia's pipeline consists of sustained and controlled-release hormone therapies, including compounds that are both orally and vaginally delivered. Earlier this year, Columbia entered into an agreement with Innovex (pharmaceutical marketing unit of Quintiles) to sell its Striant buccal testosterone product indicated for hypogonadism. It also allied with Ardana Bioscience last year to further develop Chronodyne, a vaginally delivered terbutaline product for infertility, endometriosis, and dysmenorrhea.

CV Technologies Inc.

Canadian nutraceuticals company CV Technologies grossed $1.8mm ($Cdn2.55mm) through a private placement to lead investor Brubuck Inc. and other participants. The company issued 25.5mm units at a price of $0.07 ($Cdn0.10) apiece, with each unit consisting of a common share and a 2-year common share warrant, exercisable at $0.09 each. (May)

The equity investment by Brubuck brings its sharehold in CV to 20.6% (42.8% diluted). CV will use proceeds from the financing to increase sales and marketing of its branded products. The company uses its ChemBioPrint profiling technology to develop natural therapeutics for a variety of health problems. The platform identifies, extracts, and purifies therapeutically active ingredients (phytochemicals) from plant sources to develop 'phytopharmaceuticals.' CV's marketed products include Cold-FX to support the immune system, Remember-FX for brain fatigue and memory, Cell-FX to improve cell growth and help sore joints, and Pressure-FX to support cardiovascular function and blood pressure. The company also has compounds in clinical development; its lead candidate CVT-E002 is derived from American ginseng and is in Phase II trials to increase the body's resistance to colds and flu.

CytRx Corp.

CytRx (DNA-based vaccines) raised $5.44mm through the private placement of 2.9mm shares of common stock at $1.85 per share (a 25% discount to the market average) to institutional investors. The company also issued warrants to purchase an additional 735k shares at an exercise price of $3.05 each. (May)

CytRx will use the funds to continue enhancing its RNAi technology to develop therapeutics for obesity, cancer and diabetes, as well as to further its recently announced relationship with the University of Massachusetts Medical School for development of a DNA-based vaccine for HIV. CytRx's technologies focus on DNA delivery as a method of developing therapeutics. Its Tranzfect platform transports DNA containing selected genes directly into cells to treat or prevent various diseases. Investment Banks/Advisors: Cappello Capital Corp.; Cardinal Securities

EntreMed Inc.

EntreMed (cancer and cardiovascular therapeutics) has raised $9mm with the private placement of 3mm shares to institutional investors. Each share was priced at $3 each, an 11% premium to the market average. (May)

EntreMed will use the funds to assist in its goal of becoming a small-molecule drug company. It is developing therapeutics for inflammation, abnormal blood vessel growth, and more than 80 diseases--including cancer, blindness, and atherosclerosis--that are linked to apoptotic pathways. EntreMed's drug candidates include Phase I Panzem for cancer; ENMD 0995, an angiogenesis inhibitor in Phase I trials; Phase I endostatin, a recombinant version of a protein that is in development for cancer, blindness, arthritis, and artherosclerosis; and preclinical angiostatin, a recombinant form of an angiogenesis inhibitor and a part of a plasminogen protein found in the coagulation process. Just last month the company completed a $10.25mm private placement.

Genaera Corp.

Genaera Corp., a biotech developing anti-angiogenics and respiratory disease therapeutics, grossed $5mm through the private placement of 5k convertible preferred shares to Biotechnology Value Fund and Ziff Asset Management. (May)

Each preferred share converts into 1k common shares under specified conditions. The company's lead anti-angiogenic is squalamine lactate injection, a synthetic compound originally found in the tissues of the dogfish shark, which may have therapeutic value against eye disease and various forms of cancer. The compound is in Phase I trials for age-related macular degeneration, and various stages of Phase II studies for solid tumors in prostate, ovarian, and non-small cell lung cancer patients. Genaera has also been carrying out genomics-based research with its partner MedImmune for an interleukin-9 antibody against asthma. MedImmune, which will sell the resulting product if approved, expects to file an IND in the latter half of 2003.

Generex Biotechnology Corp.

Drug delivery company Generex Biotechnology netted $2.16mm ($Cdn3mm) from the private placement of 2.8mm common shares to institutional investors. (May)

The shares carry three-year warrants to buy additional common stock at $1.23 ($Cdn1.71) per share. Shemano Group was the placement agent for the deal. Generex specializes in the buccal delivery of drugs normally only available in injectible form. Its RapidMist oral spray platform is designed to deliver large molecule drugs and is the incorporated into four of Generex's product candidates: Oralin oral insulin spray, morphine and fentanyl formulations for pain management, and low molecular weight heparin for cardiovascular applications. In September 2000, Generex agreed to develop an oral formulation of insulin for Eli Lilly, but in May 2003 the companies parted ways.

ID Biomedical Corp.

Canadian biotech company ID Biomedical (vaccines and gene identification) closed its follow-on public offering, grossing $25.5mm (including the overallotment) through the sale of 3mm common shares at $8.50 each. (May)

ID Biomedical develops subunit vaccines based on its Proteosome protein intranasal delivery technology. Subunit vaccines consist of proteins or other components of the organism rather than the entire, live organism. The company will use the money to continue the clinical development of its lead subunit vaccine candidates, both of which are in Phase II clinical trials. IDB's intranasally delivered FluINsure is designed to prevent influenza, and StreptAvax has shown efficacy against A streptococcus. The company also has vaccine candidates in preclinical development against the syncitial virus (a major cause of respiratory infections in infants and young children), and against biological warfare agents such as Y. pestis, the Plague bacterium. IDB's Velogene genomic identification assay consists of rapid tests that identify antibiotic-resistant bacteria. Its genomics analysis system, Cycling Probe, detects specific nucleic acid sequences. Investment Banks/Advisors: TD Securities Inc.; Canaccord Capital Corp.; CIBC World Markets Corp.; Desjardins Securities Inc.; Wells Fargo Securities LLC; RBC Capital Markets; Dlouhy Merchant Group Inc.

Karo Bio AB

Karo Bio (engaged in the discovery of therapies using nuclear receptors as drug targets) netted SEK120mm ($14.9mm) through a rights offering to existing shareholders. (May)

The investors had the right to buy two new shares at a price of SEK26 ($3.22) each for every five held. The new shares will begin trading on the O-list of the Stockholm stock exchange in June 2003. Karo Bio's business strategy is to provide drug discovery research tools and early development help to pharmaceutical partners, then pass on post-preclinical development to those partners. Its deals usually yield it up-front money, research funding, milestones, and royalties on the sales of resulting marketed products. The company currently has ongoing collaborations with Wyeth for atherosclerosis, Bristol-Myers Squibb for obesity, Abbott Laboratories for Type II diabetes, and Merck & Co. in the area of estrogen receptors. Investment Banks/Advisors: Carnegie Bank AS

KV Pharmaceutical Co.

Drug delivery company KV Pharmaceutical raised $175mm through the sale of convertible subordinated notes which carry a 2.5% interest rate, are convertible into common stock at $34.51 per share, and are due in 2033. (May)

The investors have the option to buy another $25mm worth of the notes. They may redeem their holdings after three years, and can require KV to buy them every five. KV originally planned to raise $130mm, but then increased the offering. The company acquires, develops, makes, sells, and out-licenses various formulations of branded and generic drugs. It has about fourteen drug delivery technologies including the Site Release controlled-release platform, FlavorTech for tastemasking drugs in a liquid formulation, and Meter Release for twice-daily dosing. KV's Ther-Rx branded drug division, which specializes in women's health and cardiovascular therapies, recently acquired nine pharmaceuticals--hematinics (stimulate blood formation) and prenatal vitamins--which combined have $16mm in revenues annually.

Peplin Biotech Ltd.

Australia-based company Peplin Biotech Ltd. (cancer therapeutics) grossed $2.3mm ($A3.5mm) through a private placement of 5mm shares priced at $0.46 ($A0.70) each (a 4% discount to the market average) to Australian and international institutional investors. (Jun.)

Wilson HTM and ABN AMRO Morgans served as placement agents for the financing. Peplin plans to use the proceeds to further develop its drug candidates for cancer and other diseases and to expand its technology into the area of protein kinase C activation and immunomodulation. The company's pipeline includes compounds in development for breast, colorectal, pancreatic, and prostate cancers. In a November 2002 deal worth $23mm, Peplin licensed Allergan exclusive rights to develop and market PEP005 in North and South America for topical and intralesional treatment of nonmelanoma skin cancer and actinic keratosis. Peplin's technology, which is based on rational drug design, aims to target the molecular biology of tumor cells and disrupt the cancer at genetic, protein, or pathway levels, often one at a time.

Pharmos Corp.

Pharmos (treatments for neurological and inflammatory diseases) raised gross proceeds of $8mm through the private placement of about 9.41mm common shares priced at $0.85 each (a 23% discount to the average market price) to ten institutional investors. The purchasers also received five-year common stock warrants that are exercisable at $1.40 per share. (Jun.)

Rodman & Renshaw (lead) and C.E. Unterberg, Towbin were the placement agents for the financing. Pharmos intends to use the funds for ongoing clinical development of its lead central nervous system candidate dexanabinol, a synthetic tricyclic nonpsychotropic dextrocannabinoid. The compound is in Phase III clinical trials for traumatic brain injury in Europe, Australia, and Israel; Pharmos will expand the trial into the US and intends to complete patient enrollment by the end of the year. The company is also conducting a Phase II study aimed at preventing postsurgical cognitive impairment in heart surgery patients. In February 2003, Pharmos received IND approval for dexanabinol from the FDA.

Seattle Genetics Inc.

Seattle Genetics (MAb therapies) has signed a definitive agreement in which it will receive up to $40mm through the sale of 1.6mm Series A preferred shares. Joint private placement leaders were JPMorgan Partners and Baker Brothers Investments, in addition to participants Delphi Ventures and BA Venture Partners (a returning backer). (May)

The preferred stock is convertible into 16mm common shares at $2.50 each, which, if fully converted, will bring the investors' ownership stake to 34.2%. Investors will also receive warrants to purchase 2mm common shares at $6.25 each. JPMorgan's Srinivas Akkaraju and Baker Brothers' Felix Baker will join SG's board. SG says these funds will provide them with three-years' worth of cash for MAb R&D programs. Currently its most advanced candidate--SGN-15--is in three separate Phase II trials: two in combination with Taxotere for prostate cancer and for non-small cell lung cancer respectively, and one in combination with Gemzar for ovarian cancer. SGN-30 is in Phase I/II for patients with Hodgkin's disease, non-Hodgkin's lymphomas, and specific leukemias. Its three preclinical candidates are SGN-40 for cancers including those of the lung, ovaries, and bladder; SGN-35 for hematologic malignancies and autoimmune disease; and SGN-17/19 (in collaboration with Genencor) for melanoma. SG hopes to close this offering next quarter, but should its stockholders not approve the financing, JPMorgan and Baker Brothers can purchase up to a combined 19.9% of the company's outstanding stock.

Spectrum Pharmaceuticals Inc.

Spectrum Pharmaceuticals (formerly called NeoTherapeutics; primarily cancer drug development) has raised $6mm in a private placement of Series D 8% cumulative preferred stock to SCO Capital Investors, SDS Merchant Fund, Xmark Funds, and ProMed Partners LP. It sold $4.4mm in the first tranche, and $1.6mm in the second tranche the following week. (May)

The stock converts into Spectrum common at $2.35/share, a 13% discount to the market average, with quarterly dividends payable in cash or common stock. Investors also get purchase warrants for common shares; in the first tranche, 945k shares at $3 apiece and another 945k shares at $3.50 each, the total of which could bring in up to an additional $6.1mm. In the second tranche, the purchase warrants are as follows: 332k shares at $3 apiece and another 332k shares at $3.50 each, the total of which could bring in up to an additional $2.2mm. The company will use the proceeds to expand its generic drug portfolio and to fund its oncology product development. It is developing anti-infective, antibacterial, and cancer generics and has filed an ANDA for ciprofloxacin, an antibiotic. Spectrum is developing EOquin, in Phase I for bladder cancer; Neotrofin, a Phase I treatment for chemotherapy-induced neuropathy; and elsamitrucin, in Phase II for non-Hodgkin's lymphoma. It is also co-developing satraplatin--an orally administered cytotoxic platinum derivative (soon to begin Phase III) for prostate cancer--with GPC Biotech, which is funding all expenses.

StemCells Inc.

Cell therapy research company StemCells has entered into an agreement to raise $6.5mm through the private placement of 4mm common shares at $1.625 each--a 23% premium to the market average--to the Riverview Group LLC. The investor also gets a warrant exercisable for an additional 1.9mm shares priced at $1.50 each. (May)

The company researches stem cells taken from a variety of human tissues such as the brain, liver, and pancreas. Transplanted stem cells are known for their ability to regenerate and develop cell characteristics of the organ in which they are placed, providing a healthy environment for introducing new tissue. Its preclinical neural stem cell program is based on finding markers for sorting, purifying, and transplanting brain stem cells to treat degenerative CNS diseases including Parkinson's and Alzheimer's. It has shown promise as a therapy for spinal cord injury and Batten disease (a genetic disorder that causes damage to the brain). StemCells has other programs looking at the application of these cells in other diseases. In the future, it also hopes to investigate the potential of stem cells as gene therapy vehicles, and for their use in drug discovery and screening.

Taro Pharmaceutical Industries Ltd.

Taro Pharmaceutical Industries has raised $60mm with the sale of long-term nonconvertible debt to banks and institutional investors in Israel. Three banks invested $10mm each in the offering. (Jun.)

The company will make five equal repayments of the principal each year between 2006-2010; interest payments will be made semi-annually. About $45mm of the debt has a fixed annual interest rate of 6%, the rest has an adjustable rate of the London InterBank Offered Rate (LIBOR) + 2.25%. Taro will use the funds for investments and possible acquisitions. It has recently received approval for its ANDA for ammonium lactate cream 12%, the generic equivalent of Bristol-Myers Squibb's Lac-Hydrin, for relief of dry skin; and an ANDA for etodolac XL tablets, the generic form of Wyeth's Lodine XL tables for osteoarthritis and rheumatoid arthritis. Taro also markets generic drugs including topical corticosteroids and antifungals.

VaxGen Inc.

Vaccine developer VaxGen Inc. raised net proceeds of $4.9mm by privately placing 1.7mm common shares with an unnamed institutional investor. The shares were sold at $2.87 each, which represents an 11% discount to the market average. (May)

VaxGen seeks to use the funds to develop a new safe and effective anthrax vaccine that requires no more than three injections; currently there is only one available vaccine and it requires six injections over 18 months. The company is working with Battelle to develop and test the anthrax vaccine candidate rPA102, which was originally discovered by the US Army Medical Research Institute of Infectious Diseases. VaxGen will also use the proceeds to continue developing a smallpox vaccine candidate called LC16-Kaketsuken, which is based on the LC16m8 clone of the Lister strain of the vaccinia virus. VaxGen acquired US development rights to LC16-Kaketsuken in December 2002 from Japan's Chemo-Sero-Therapeutic Research Institute. It believes the vaccine will have an improved safety profile over currently available smallpox vaccines in the US.

VI Technologies Inc.

VI Technologies ("Vitex," developing drugs to purify blood for transfusions) raised $14.4mm in a rights offering of about 14mm registered shares at $1.02 each. Participating stockholders included several venture and institutional investors and all of the corporate directors and executives. (May)

The company's lead product is the Inactine pathogen reduction system, which is in Phase III clinicals for removing prion proteins and inactivating viruses, bacteria, and parasites from red blood cells. The technology binds to the nucleic acid of a pathogen, preventing its replication. Vitex says the red blood cell transfusion market is over 40 million units a year in the US, Europe, and Japan. The company is looking for a distribution partner for Inactine. Pall (a stockholder participating in the rights offering) had originally held the license but is allowing Vitex a one-year period in which it may negotiate new agreements; in August, Pall will have the option either to reacquire any geographic areas still available, or to receive a royalty on Inactine as a treatment for red blood cells. In the life sciences market, Amersham Pharmacia Biotech has marketing rights to the technology.

Vivus Inc.

Vivus (develops sexual dysfunction therapies) grossed $17.5mm through a private placement of 4.375mm common shares priced at $4 each (an 11% discount to the market average) to BayStar Capital II, SAC Capital Associates, Royal Bank of Canada, Special Situations Funds, and Zesiger Capital Group. (May)

CE Unterberg Towbin served as the placement agent for the transaction. Vivus currently has three compounds in the clinic--oral TA-1790, in Phase I for erectile dysfunction; VI-0134, in Phase I for premature ejaculation; and Alista, in Phase II/III for female sexual dysfunction. TA-1790 is a specific, highly selective phosphodiesterase type 5 (PDE5) inhibitor that has demonstrated its ability in preclinical trials to increase penile blood flow by increasing smooth muscle relaxation in a way similar to sildenafil, which is the active ingredient in Pfizer's Viagra. Vivus is developing VI-0134 as an oral drug candidate that can be administered shortly before intercourse to increase the latency period prior to ejaculation. Alista is a topical formulation of alprostadil that can increase blood flow to the genital tissues in females to improve sexual function.

Women First HealthCare Inc.

Women First HealthCare (pharmaceuticals for women) raised $2.5mm through the private placement of approximately 3.5mm common shares to its chairman, president and CEO Edward Calesa and other investors. The shares were sold for $0.71 apiece, a 28% discount to the market average. (May)

The placement was made in connection with the recent restructuring of the company's senior secured notes and convertible redeemable preferred stock due to unsatisfactory financial quarterly results; a condition of the restructuring was that the company have at least $2.5mm additional capital on hand. Women First's products are aimed at women over 40 and include the Esclim transdermal patch and Ortho-Est tablets for hormone therapy, Bactrim antibiotic for urinary tract infections, and the Midrin headache capsule for tension and vascular/migraine headaches. The company acquired rights to its lead product, the facial hair reducing cream Vaniqa, from Bristol-Myers Squibb Co. and Gillette, and recently licensed US marketing rights for the product to Ventiv Health. The restructuring of the convertible redeemable preferred stock concurrent with this placement was initially issued to fund the acquisition of Vaniqa.

Research/Analytical

Joint Arrangements

Acacia Research Corp.

CombiMatrix Corp.

Toppan Printing Co. Ltd.

Acacia Research's CombiMatrix (biochips) will work with Toppan Printing (designs and manufactures semiconductor devices and microelectronics) for several years on the development and manufacturing of microarrays that use CombiMatrix's electrochemical detection technology. (May)

CombiMatrix will receive a $1mm up-front fee, plus development and milestone payments. The companies will co-develop semiconductor microarrays for use in life science R&D and diagnostics. Toppan will manufacture the microarrays for Combimatrix and its partners, sharing revenues and royalties. Combimatrix's microarrays use electrochemical techniques to synthesize biological molecules; the companies will now use the electrochemical approach to detect the molecules. Combimatrix has already tested the technology with biological and chemical defense samples. Combimatrix says the new agreement will not impede upon the arrangements it has made with Roche involving products that use optical detection technologies.

Ariad Pharmaceuticals Inc.

DiscoveRx Corp.

Ariad Pharmaceuticals (small molecules that regulate cell signaling) is granting DiscoveRx (genomic technologies for high-throughput screening) nonexclusive rights to commercialize drug discovery assay products covered by Ariad's patents on NF-(kappa)B signaling proteins. The body's cell-signaling process regulates gene expression and other cellular responses to external stimuli. (May)

DiscoveRx will pay a license fee up front, annual license fees, milestones, and royalties. It has already launched some cell-based drug discovery assays that involve measuring degradation of a protein that inhibits NF-(kappa)B. Ariad owns exclusive rights to a portfolio of NF-(kappa)B patents from the Whitehead Institute of Biomedical Research, MIT, and Harvard. The company plans to generate revenues through nonexclusive agreements with any commercial licensees that need access to the technology; it says that to encourage non-commercial research, it will not require academic scientists to get licenses. In its in-house programs, Ariad has used signaling technology to develop small-molecule drugs for cancer treatment; two of the products have reached clinical testing.

Ciphergen Biosystems Inc.

LumiCyte Inc.

Molecular Analytical Systems Inc.

Ciphergen Biosystems (protein biochips), LumiCyte (bioinformatics and biochips), and Molecular Analytical Systems have settled a lawsuit, granting Ciphergen exclusive rights to patents pertaining to the SELDI-TOF (Surface Enhanced Laser Desorption/Ionization-Time of Flight) mass spectrometry technology. (May)

Originally, Molecular Analytical licensed rights to the patent and related IP from Baylor College of Medicine. LumiCyte stepped in and licensed the rights from Molecular Analytical, but will now hand over all sublicensing rights, IP, marketing rights, and the worldwide exclusive license to Ciphergen. In turn, Ciphergen pays $3mm cash up front and 1.25mm common shares (valued at about $8mm based on market average) to LumiCyte, as well as royalties of up to $10mm over a 10-year period to Molecular Analytical. Ciphergen uses the SELDI technology in its lead ProteinChip proteomics technology for protein discovery, characterization, and assay development in the research of gene function and diseases. It also intends to expand its Biomarker Discovery Center to include protein-based diagnostics and drug discovery products.

Financings

Acacia Research Corp.

CombiMatrix Corp.

Acacia Research Corp.'s CombiMatrix division (develops biochips) netted $4.9mm through a private placement of about 2.4mm units priced at $2.20, an 11% discount to the market average. Each unit consists of one share of Acacia Research-CombiMatrix common stock and one half warrant. A whole warrant allows investors to purchase one common share at $2.75 each. (May)

Acacia Research-CombiMatrix common stock was created in December 2002 by dividing Acacia's common into shares of two new classes of common--the other is Acacia Research-Acacia Technologies stock. CombiMatrix's lead technology comprises lab-on-a-chip integrated circuits containing arrays of microelectrodes, which allow hundreds or thousands of different molecules to be synthesized in parallel. It can be used to identify and determine the roles of genes, gene mutations, and proteins, and perform multiplexed assays that involve DNA, RNA, proteins, peptides, or small molecules. CombiMatrix is currently working with the National Institute of Allergy and Infectious Diseases to screen small interfering RNA molecules against genes of the SARS corona virus.

Supplies, Equipment & Devices

Acquisitions

Abbott Laboratories Inc.

Abbott Vascular Devices

Jomed NV

Abbott will build its cardiovascular device franchise by purchasing Jomed NV's coronary and peripheral interventional product line. The deal includes stent graft, balloon, and catheter devices. (May)

Abbott will pay €60mm ($70.2mm) cash in exchange for products, IP, equipment, facilities, and employees; the operations will become part of Abbott Vascular Devices. Jomed has marketed the divested products mostly in Europe and Asia. The company has recently declared bankruptcy and is deciding which assets to sell off and how to regroup. For the time being, Jomed is keeping its IVUS, functional measurement, and cardiac surgery operations. Abbott's existing vascular portfolio comes largely from the acquisitions of Perclose Inc. (arterial closure devices) in 1999 and the stent business of Biocompatibles 2002; Abbott Vascular also has co-promotion rights to MedNova's carotid stents and embolic filters.

Abbott Laboratories Inc.

Hospital Products Division (Abbott)

Spinal Concepts Inc.

Abbott Laboratories has agreed to purchase private device company Spinal Concepts (spinal implant products) for about $170mm plus earn-outs of up to $40mm if certain predetermined sales targets are met over the next two years. (Jun.)

The acquisition gives Abbott a portfolio of existing devices and pipeline products to strengthen its Hospital Products Division; the company hopes to target patients with unmet medical needs and offer better clinical results and reduce hospital stays. Abbott's Hospital Products Division has recently expanded into the area of cardiovascular devices and will now have the ability to move into the spinal market, which represents the fastest growing segment in orthopedic implants. Spinal Concepts has developed various fixation devices to treat disorders, diseases, and injuries of the spine. It currently markets the BacFix and InCompass pedicle screws for thoracolumbar fixation, the SC-AcuFix cervical plate line, Cerasorb bone void filler, and a line of bone allografts called Natural Selection. Spinal Concepts reported 2002 sales of approximately $25mm.

Aradigm Corp.

Weston Medical Group PLC

Weston Medical Group PLC, which was forced into bankruptcy in February, is selling to Aradigm Corp. (aerosol delivery) the assets relating to its main product candidate, Intraject, a needle-free drug delivery device. After the divestiture, the UK company will cease operations. (May)

Aradigm will pay about £1.25mm ($2mm) cash in return for test and production equipment, intellectual property, and other assets. Weston's ongoing clinical development of Intraject foundered last fall over technical issues--a setback that threatened to delay launch for two years--and this disappointment slashed 95% off Weston's $140mm London Stock Exchange market cap. Although the poor current market made it impossible for the company to get back on its feet, recent clinical studies have proved successful, and Aradigm says the technical problems can be resolved. Weston was developing Intraject projects with drug partners like Roche, GlaxoSmithKline, Abbott, and Chugai. The single-use pen can deliver liquid formulations of antibodies, proteins, and small-molecule drugs; it eliminates needlesticks and avoids dosing errors that can happen when solutions must be transferred into syringes.

Biolase Technology Inc.

American Medical Technologies Inc.

Biolase Technology (dental lasers and biomaterials) has acquired the assets of diversified company American Medical Technologies' (formerly American Dental Technologies) laser business for cash and stock. (May)

Biolase will pay about $1.8mm cash and 307.5k shares of its common stock (which have been trading on the average of $11.77 a share) for a total price of approximately $5.4mm. The purchase includes a large portfolio of dental laser patents, IP, products including DioLaseST and PulseMaster 600 IQ, current names as well as the prior names of American Dental and American Dental Laser, trademarks, inventory, customer lists, and all existing dental laser relationships with universities. DioLaseST and PulseMaster 600 IQ will complement Biolase's dental laser products, including Waterlase Hydrokineticsurgical cutting systems and LaserSmile soft tissue laser and teeth whitening system. The sale will allow AMT to substantially reduce its debt and focus on its remaining product lines and growth opportunities in the dental, medical, and industrial areas.

Medex Inc.

Johnson & Johnson

Ethicon Endo-Surgery Inc.

Medex (critical-care medical devices and equipment) has acquired the vascular access business of Johnson & Johnson's Ethicon Endo-Surgery. (May)

The business unit, which is ranked second to Becton Dickinson in sales of safety catheters, markets peripheral IV catheters, Protectiv and Acuvance safety IV catheters, and Optiva, Jelco, and Cathlon conventional IV catheters. Medex officials say the company will now be able to provide its customers with complete fluid and drug infusion systems (including infusion pumps, fluid and drug administration products, and IV catheters). It will also continue to expand its syringe pump line and respiratory unit-dose drug portfolio. In order to finance this transaction, Medex has sold enough shares to One Equity Partners (the equity arm of Bank One) to make it the company's major shareholder. Analysts say the deal has tripled the size of Medex's business, which is expected to have sales of $300mm after the acquisition, compared to the $100mm in sales it had estimated for 2003.

Medical Ventures Corp.

Angiometrx Inc.

Medical Ventures (buys, develops, and markets cardiovascular devices) has acquired Angiometrx, a private company that has developed the Metricath catheter-based system for use in cardiovascular procedures. (May)

Angiometrx shareholders received 5.6mm MV shares valued at $2.6mm ($Cdn3.5mm). MV will issue stock options to employees enabling them to buy up to 298k shares at $0.75 each over the next five years. Metricath permits doctors to measure arterial size and wall characteristics while performing surgery for coronary and peripheral artery disease. The company expects FDA approval for Metricath in 2004.

Sonic Innovations Inc.

Sanomed Handelsgesellschaft MBH

Digital hearing device company Sonic Innovations has expanded its presence in Europe through the purchase of private German hearing aid distributor Sanomed Handelsgesellschaft MBH. (May)

Sonic Innovations will pay €11.2mm ($13mm) in cash--about 65% of Sanomed's 2002 sales--plus a potential earnout between €3.5-4.3mm ($4-5mm) based on the company's sales over the next three years. In Germany, reported to be the world's second largest market for hearing aids, Sanomed sells a variety of the devices from different manufacturers. Sonic Innovations has developed, with patents licensed from Brigham Young University, a digital signal processing technology it uses in all its hearing aids including its Natura and Conforma brands. This acquisition will broaden the company's European distribution channels. It had European hearing aid sales of about $14mm in 2002.

Sybron Dental Specialties Inc.

Kerr Corp.

Spofa Dental AS

Sybron Dental Specialties Inc.'s dental consumables subsidiary Kerr Corp. has acquired privately held Spofa Dental AS, a dental supplies manufacturer in the Czech Republic. (May)

Sybron will pay cash for Spofa, which had 2002 sales in the $10-15mm range. The company is purported to hold a 30% share of the Czech, Bulgarian, and Slovakian markets. Spofa offers known brands such as Stomaflex (silicone impression materials), Superacryl (resins for denture repair), Desident (a disinfectant for medical instruments), Jodisol (antiseptic for surface skin injuries and instrument cleansing), Evricol (cavity and crown filling materials), Adhesor (dental cement), and Spofadent (resin teeth). This acquisition will establish a greater presence for Kerr in the Central and Eastern European countries, where it will distribute Spofa's complementary products as well as its own existing consumables line, which includes restorative and impression materials, preventive and laboratory products, endodontic and infection-control instruments, and disposables. Investment Banks/Advisors: Harris Williams & Co. (Spofa Dental AS)

Steris Corp.

Sterion Inc.

Steris (infection control and biohazardous material decontamination technology) has bought Sterion Inc.'s (formerly Oxboro Medical; med/surg equipment and supplies) sterilization container unit. (May)

Steris will pay $2.9mm in cash--about 80% of the division's 2002 sales. The primary item in this line is the Sterion sterilization container system for management of surgical instrument processing, storage, and sanitary transport with available accessories such as instrument organizer kits, container ID name plates, and tamper-evident devices. Sterion claims its system offers advantages over aluminum, stainless steel, or plastic containers because it is made of a material resistant to dents and chemical damage, and offers an extended shelf life for the sterilized instruments. In June 2001, Sterion (then Oxboro Medical) purchased and took over the name of Johnson & Johnson Medical's Sterion sterilization container unit. In October of the same year, Sterion expanded into the wound drainage supplies business by acquiring Surgidyne, which makes closed suction systems; the sterilization divestiture will allow it to focus on this area and others it believes will be more profitable. Sterion's other product lines, which it will retain, include instrument protection and cleaning supplies, O.R. disposables, and surgical tapes. Steris will add Sterion's assets to its existing infection and contamination-prevention instruments, which include the Amsco, Quantim, and Statim brands of steam sterilization systems.

Symmetry Medical Inc.

Mettis Group

Thornton Precision Components Ltd.

Ultrexx Inc.

Private US orthopedic tool and instrument manufacturer Symmetry Medical and UK company Mettis Group's orthopedic businesses will merge to form a global supplier of orthopedic equipment. (May)

Symmetry (owned mostly by investor Olympus Partners) will be the majority owner of the new company, which will also retain its name and corporate location in Warsaw, Indiana. Current Mettis CEO Brian Moore will become the new entity's president and CEO. Symmetry's focus is on custom orthopedic tools and instruments, and the cases for them, while Mettis is mainly a manufacturer of hip, knee, and shoulder implant components. Symmetry's divisions--Othy Inc., with a line of instruments primarily for hip and knee joint replacement surgeries, and PolyVac Inc., which makes lightweight plastic and metal cases and trays for surgical instrument sterilization, storage, and transport--both merged to form Symmetry in 1996. Mettis orthopedic businesses include UltreXX (surgical instruments and orthopedic implants), which it acquired in 2000, and Thornton Precision Components (surgical devices and forged, cast, and machined orthopedic implants--mainly knee, hip, and shoulder; is also a component supplier to the aerospace industry). The combined company will provide hip, knee, spine, and trauma device manufacturing from design through finished product with an expanded offering of surgical instruments, cases and implants. Its manufacturing facilities and capabilities will include forging, casting, machining, polishing, and assembling kits.

Joint Arrangements

B. Braun Melsungen AG

Aesculap AG & Co. KG

Aesculap Inc.

Spinal Innovations Inc.

B. Braun's US surgical instrument distribution subsidiary Aesculap Inc. has licensed worldwide marketing and sales rights to Spinal Innovations' (founded 1996; spinal fixation systems) polyaxial screw system, the Shadow. (May)

The Shadow is an implantable device used to surgically stabilize the spine to treat degenerative disc disease as well as lumbar spine deformities. Spinal Innovations, which will retain manufacturing rights, says its Shadow system is made to the specifications of spinal surgeons, offering varying length polyaxial screws and rods that are easy to use, and offers a more successful spinal fusion rate among degenerative spinal disorder patients (as opposed to patients not receiving pedicle screw implants). Allying with Aesculap, which has a worldwide distribution presence, will enable the company to advance its position in the global spinal implant market.

Centerpulse AG

Centerpulse Spine-Tech

U&I Corp.

Centerpulse Spine-Tech (spinal surgery) will exclusively distribute in North America U&I Corp.'s (orthopedic surgical implant manufacturer) Optima spinal fixation system. (May)

The Optima is a polyaxial pedicle screw system intended to provide, in addition to spinal fusion, the immobilization and stabilization of spinal segments, allowing the screws to be placed in the best possible anatomical locations. The addition of U&I's device will add to Spine-Tech's existing pedicle screw products, the Silhouette posterior fixation system and the ST360 line of polyaxial screws and lateral connectors. This deal provides U&I, whose headquarters and primary manufacturing facilities are located in South Korea, the ability to expand its worldwide distribution capabilities.

Guidant Corp.

ResMed Inc.

ResMed (medical devices to correct respiratory problems) and Guidant entered into an agreement to jointly develop tests and treatments for cardiac rhythm problems and untreated sleep-disordered breathing (SDB). Published results from recent clinical studies suggest a link between the conditions. (May)

The partners will share efforts in R&D, clinical trials, market development, and public and physician education. Since the patient populations for SDB and cardiac rhythm disorders largely overlap, Guidant and ResMed plan to explore the ways in which their respective devices complement one another for various patient groups. They also intend to co-promote their current and future product offerings to each other's customers. Guidant has been actively pursuing ways to help patients with pacemakers, defibrillators, and other heart rhythm resynchronization devices to manage SDB. ResMed's products include nasal inhalers CPAP, VPAP, and AutoSet for use at home to treat SDB, devices to treat obstructive sleep apnea, and laboratory equipment used in sleep studies.

Financings

Delcath Systems Inc.

Delcath Systems (perfusion system that delivers chemotherapeutics specifically to the liver) raised net proceeds of $1.9mm in a follow-on offering of 677.4k units, each consisting of five shares of common stock plus five callable five-year warrants (each for the purchase of one common share at $0.775, or 25% of the $3.10 unit offering price). (May)

Delcath's machine takes blood that is flowing into the liver and infuses it with a chemotherapy agent; redirects it out of the patient's body after it passes through the liver; filters it to remove most of the drug; then returns it to the patient's general circulatory system. This isolation of the liver means that larger doses of medicine can go where they are needed without compromising the safety of other parts of the body. The treatment should serve patients who cannot have tumors removed surgically (because of poor health or inoperable tumor location) and those who need multiple treatments because of recurrence. Delcath's system may be less expensive than surgery in terms of procedural and hospitalization costs associated with the side effects of chemo. The new funds will pay for ongoing Phase I trials and allow commencement of Phase II using melphalan against cancerous tumors in the liver and Phase III of doxorubicin to treat malignant melanoma that spreads to the liver. Investment Banks/Advisors: ViewTrade; Roan/Meyers Associates LP

Isolagen Inc.

In a financing that exceeded its minimum targets, Isolagen (autologous cellular tissue regeneration) grossed $4.4mm with its Series B private placement of 156k shares of 6% convertible preferred stock at $28 apiece to undisclosed investors. Each preferred share converts to eight common at any time following issuance. Fordham Financial managed the offering. (May)

Isolagen will use the funds to complete its Australian production plant and further US regulatory processes as well as the European and Asian commercialization of its autologous cellular system (ACS) for hard and soft tissue regeneration in cosmetic surgery and papilla recession, a periodontal disorder known as black triangle disease. ACS is a process that extracts and reproduces the patient's own collagen-producing cells (called dermal fibroblasts), and then reintroduces them into the patient. Isolagen claims that ACS offers an improvement over the standard treatment that uses bovine collagen, a cow-derived protein generally reabsorbed within a few months (the bovine collagen can also stimulate the development of antibodies and enzymes that compromise the effectiveness of the treatment). Investment Banks/Advisors: Fordham Financial Management

Ortec International Inc.

Ortec International (engineered tissues) netted $5.34mm by selling Series C convertible preferred stock to existing investors. The share price of $0.20 is the same as the company's common stock and will be the fixed conversion price (Note: this figure does not take into account the company's intention to complete a 1-to-10 reverse stock split soon). (Jun.)

The instrument has a face value of $6mm and pays 10% interest in cash or common stock (at Ortec's option). The Series C shares will automatically convert if the common stock gets as high as $0.60 for 10 consecutive days. Purchasers also received warrants to buy another 18k common shares at $0.36. Ortec says the financing will give it enough money to complete the pivotal clinical trial of OrCel, its bi-layered cellular matrix, for an added indication (venous ulcers; the product is already approved for treating donor site wounds in patients with burns). The funding should also cover the PMA filing and the start of Ortec's manufacturing arrangements.

PhotoMedex Inc.

PhotoMedex (excimer lasers and fiber-optic systems) raised net proceeds of $9.6mm through a private placement of 5.98mm common shares priced at $1.70 each (a 10% discount to the market average) to lead investor Corsair Capital Management. (May)

Investors also received five-year warrants to buy another 1.5mm common shares at $2.00 each, which are not exercisable until six months following the close of the financing. Emerging Growth Equities served as the placement agent for the transaction. PhotoMedex says it will use the funding for production of its XTRAC excimer laser system. The product is the first FDA-approved laser treatment for psoriasis, atopic dermatitis, and vitiligo. In December 2002, the company acquired Surgical Laser Technologies to help it further its manufacturing and sales infrastructure for the XTRAC technology.

Vital Images Inc.

Vital Images (imaging software) raised net proceeds of $19mm through a private placement of 1.5mm common shares priced at $13.50 each (a 14% discount to the market average) to eight accredited institutional investors. (Jun.)

US Bancorp Piper Jaffray served as the placement agent. Vital Images' Vitrea 2 imaging software allows for the evaluation of computed tomography and magnetic resonance image data, and has applications in screening, clinical diagnostics, and therapy planning. It combines 2-D and 3-D visualization with analysis, enabling radiologists and clinicians to scan patients in real time for various diseases and conditions. Vitrea 2 provides simpler and faster visualization than alternative imaging techniques. The company says it hopes to find additional applications for the product within the heathcare market.