Deals Shaping the Medical Industry (02/2004)

Summarizing the deals in the medical industry.

In Vitro Diagnostics

Acquisitions

Pfizer Inc.

Pfizer is selling its in vitro allergy and autoimmune diagnostic testing business to European private equity company Triton and PPM Ventures (Prudential's private equity arm) for $575mm in cash. (Jan.)

Pfizer acquired the diagnostic testing business when it completed its acquisition of Pharmacia in April 2003. The business unit has been focusing on the development, manufacture, and marketing of complete blood test systems for diagnosing and monitoring allergy, asthma, and autoimmune diseases. The acquired unit, which is headquartered in Uppsala, Sweden and has 1,100 employees, reported 2002 sales of $200mm. Pfizer decided to sell the business because it does not fit the company's current strategic focus of pharmaceuticals, consumer healthcare, and animal health operations. Investment Banks/Advisors: Lazard LLC (Pfizer Inc.)

Joint Arrangements

Abbott Laboratories Inc.

Applera Corp.

Celera Diagnostics

Atria Genetics Inc.

Atria Genetics (high-resolution HLA typing) licensed Abbott Laboratories exclusive rights to market and distribute, outside the US, its AlleleSEQR human leukocyte antigens (HLA) DNA sequencing-based typing products, including tests for class I and class II HLA genes. (Jan.)

The licensed tissue-typing tests can identify potential bone marrow donors by determining the compatibility between possible donors and transplant recipients, therefore reducing complications to the immune system and maximizing the likelihood of graft survival. AlleleSEQR can also be applied in the study of vaccines, infectious diseases, and anthropology. Under the agreement, Abbott also receives exclusive US marketing and distribution rights for HLA analyte specific reagents--based on polymerase chain reaction DNA amplification and automated fluorescent DNA sequencing--which it will distribute through its partnership with Celera Diagnostics.

Affymetrix Inc.

Perlegen Sciences Inc.

AstraZeneca PLC

Affymetrix's genetics unit Perlegen Sciences will work with AstraZeneca to identify common gene variants that can increase the risk of heart attack. The companies plan to use the information to develop new drugs and diagnostics. (Jan.)

Perlegen will use its expertise in human genetic variation along with its pharmacogenomics technologies to genotype single nucleotide polymorphisms (SNPs) that it has identified, aiming to find genetic markers associated with heart attack. AstraZeneca feels the collaboration will accelerate its research in the area of myocardial infarction. This month Perlegen also signed two genomics deals with Pfizer, one in the area of depression and the other in metabolic syndrome.

Aventis SA

Aventis Behring LLC

Dade Behring Inc.

Aventis Behring LLC (Aventis SA's proteins business; specializes in blood plasma) has licensed Dade Behring exclusive rights to its technology regarding Factor VII activating protease (FSAP) and mutant forms of it. DB hopes to develop an assay that uses FSAP as a marker. (Jan.)

A mutant form of the protein, discovered only recently, is the Marburg I SNP, a variation that exists in 4% of the population and may be a risk predictor for carotid stenosis. FSAP activates prourokinase, which is important to the process of breaking down blood clots; people with the Marburg I variation in FSAP have a clearly reduced capacity to activate this enzyme and thus maintain the proper balance between blood clot formation and degradation. Beyond this use, DB believes further studies will prove FSAP to be an indicator for stroke and various cardiovascular diseases. It is the first arterial occlusion marker that links coagulation disorders with chronic arterial diseases.

Calgary Laboratory Services

Tm Bioscience Corp.

Tm Bioscience (DNA-based diagnostics) and Calgary Laboratory Services (CLS; diagnostic laboratory) will work together on the development of a genetic test to identify and characterize methicillin-resisitant Staphylococcus aureus (MRSA) in hospitals. (Dec.)

Tm Bioscience will combine its Universal Array technology (it can complete numerous single DNA tests at the same time) with CLS's abilities to perform clinical research to develop the diagnostic. Patients infected with SA/MRSA require longer hospital stays, and may have permanent damage or die from complications of the infection. Current technologies require 5-7 days to diagnose MRSA infections and may not detect all cases; the companies say their new diagnostic will speed up the time it takes to get a complete diagnosis, enabling patients to receive treatment earlier and potentially lessen the effects of the bacteria.

Chiron Corp.

Infectio Diagnostic Inc.

DNA-based assay company Infectio Diagnostic has licensed Chiron rights to its proprietary nucleic acid-based technology for the detection of bacteria in blood and blood products. Over the next two years, Infectio will transfer the whole technology (including R&D and manufacturing rights) to Chiron. (Jan.)

Chiron's blood testing unit will use the technology, in addition to its own Procleix assays and testing systems, to screen blood, plasma, and other donated tissue specimens for bacterial contamination prior to transfusion procedures. ID's platform performs universal detection (identifying genes common to all bacteria), disease-specific gene identification, antibiotic-resistant gene detection (to avoid use of broad-spectrum antibiotics), and bacterial strain distinction. This microbial identification allows for more rapid and accurate treatment of contaminated blood and reduces the risk of transfusion-transmitted infection. Chiron estimates that one in 17k transfusions can lead to death due to infectious contamination.

ExOxEmis Inc.

PrognostiX

Anti-infectives developer ExOxEmis has made a $6mm investment in Cleveland Clinic spin-off PrognostiX (develops diagnostics for cardiovascular disease, asthma, and other inflammatory diseases). (Jan.)

PrognostiX has access to technology developed by the Cleveland Clinic's Stanley Hazen, MD, PhD, who identified characteristic compounds linked to the origins of specific diseases and used the information to discover new diagnostic markers. The company's lead product is a blood test that measures the level of MPO or myeloperoxidase--an enzyme found in disease-fighting white blood cells--in order to determine if patients are at risk for having a heart attack. MPO levels can also suggest whether a patient should receive bypass surgery or angioplasty.

Mitsui & Co.

SomaLogic Inc.

Sumitomo Bakelite Co. Ltd.

Aptamer technology company SomaLogic got $11mm in equity funding from two Japanese companies; existing backer Mitsui & Co., a life science products producer, invested $10mm and plastics manufacturer Sumitomo Bakelite Co. provided $1mm. (Dec.)

Sumitomo has signed an agreement with SomaLogic for the joint development of special surfaces for use in the company's aptamer arrays. SomaLogic will use Mitsui's investment to support continued R&D on its aptamer technology that will be used in clinical diagnostics. Its Selex aptamer platform identifies aptamers (single-stranded DNA or RNA known for its superior binding ability) that when used in quantitative arrays, enable the measurement of large numbers of proteins. This data may help in determining the potential links between proteins and diseases, finding the molecular basis of diseases, and enhancing diagnosis and treatment. Mitsui and SomaLogic will also establish a jointly managed Asian division. The two have a 2001 partnership, which gave Mitsui Asian rights to sell aptamers SomaLogic had selected with Selex technology.

Financings

AMDL Inc.

AMDL Inc. (cancer diagnostics) grossed $2.13mm through a Regulation D/Regulation S private placement of 2.66mm common shares priced at $0.80 each, representing a 32% discount to market. Investors also received three-year warrants to buy another 1.33 common shares, exercisable at $1.46 each. (Jan.)

The company intends to use the proceeds to market its DR-70 and for ongoing development of a combination immunogene therapy technology. DR-70 is a non-invasive blood test that can detect (with 84% accuracy) lymphoma and cancers of the lung, breast, stomach, liver, colon, rectum, ovary, esophagus, cervix, trophoblast, thyroid, and pancreas. Last month the product received the CE Mark in Europe. AMDL's combination therapy was designed to build up the body's immune system and destroy cancer cells. It is being developed for people diagnosed with cancer and may eventually have use as a vaccine to protect patients at risk of cancer, based on their family history.

Apogent Technologies Inc.

Apogent Technologies Inc. (develops laboratory and life science products for health care diagnostics and scientific research) privately sold $345mm in floating rate senior convertible contingent debt securities due 2033 to qualified institutional buyers under Rule 144A. (Dec.)

The securities convert into Apogent common shares at $33.09 each, subject to certain predetermined circumstances. The company can redeem all or some of the convertible securities on or after March 15, 2010. Debt holders also have the option to require the company to buy back all or a portion of their notes, starting in mid-December 2008 and then 2014, continuing every five years until 2029. Apogent said it is using $70mm of the net proceeds to repurchase of 3mm of its common shares. It also plans to use some of the funds to pay down a portion of its debt.

IDx Inc.

Spectral Diagnostics Inc.

Spectral Diagnostics is spinning off a half interest in its R&D activities to lead investor Canadian Medical Discoveries Fund and other backers. The business will run as a 50/50 joint venture called IDx Inc., which will focus on the R&D of rapid diagnostics for infectious diseases and hold exclusive worldwide marketing rights (except in the US) to all products developed. (Dec.)

Spectral will invest a nominal amount of cash plus intellectual property valued at $1.51mm ($Cdn2mm) and retain exclusive US marketing rights to products that may come out of IDx. CMDF is investing $1.51mm in cash and $3.02mm in subordinated debt and has been granted (along with the other investors) 500k five-year warrants to purchase Spectral common shares at $2.26 each (the current market average is $1.94). Under certain conditions, CMDF will have the option to exchange its interest in the JV for cash or Spectral stock. Dr. Joseph H. Keffer, Spectral's chief medical officer since 1997, will lead the new company. Spectral plans to turn over its R&D activities to IDx, ideally accelerating commercialization of new infectious disease assays, and will itself focus on manufacturing and sales operations. Spectral currently makes and sells rapid diagnostics Endotoxin Activity Assay for sepsis and Cardiac STATus for myocardial infarction.

Tm Bioscience Corp.

Tm Bioscience (DNA-based diagnostics) has brought in almost $9mm ($Cdn12mm) with the private placement of 37.5mm units priced at $0.24 each. (Dec.)

Each unit consists of one common share and a warrant to buy one-half of a common share. A whole warrant will enable the holder to purchase a common share at $0.30 through June 2005. The company will use the funds, along with the $5.5mm equity investment Technology Partnerships Canada recently made, to continue the development and future marketing of genetic tests. Tm Bioscience is creating tests to detect genetic mutations involved in the following areas: hematology, cystic fibrosis, and toxicology. Investment Banks/Advisors: Loewen, Ondaatje, McCutcheon Ltd.

Trinity Biotech PLC

Trinity Biotech (point-of-care diagnostics) has grossed $22.5mm with the private placement of 5.3mm ordinary shares to institutional investors. The shares were priced at $4.25 each (a 5% discount based on the market average) and were accompanied by five-year warrants to buy another 1.06mm ordinary shares at $5.25 apiece. (Jan.)

The investors also get the ability to purchase an additional 2.7mm ordinary shares at $4.25 within 30 days of the transaction closing. (If they choose to buy the shares, no warrants will be issued.) Trinity Biotech manufactures and markets test kits for the diagnosis of infectious diseases (including sexually transmitted diseases), blood coagulation disorders, and autoimmune diseases. Just last month the company received FDA approval to sell its Uni-Gold Recombigen HIV test in the US. Investment Banks/Advisors: Rodman & Renshaw Inc.

Pharmaceuticals

Acquisitions

Auxeris Therapeutics Inc.

Ceros Pharmaceuticals Inc.

Auxeris Therapeutics (bone disease treatments) is acquiring all assets of Ceros Pharmaceuticals (develops osteoporosis treatments), including a promising oral bone-forming therapy. (Jan.)

As part of the deal, Ceros' founder and bone specialist at the Baylor College of Medicine, Dr. Gerard Karsenty, takes a seat on Auxeris' board. Ceros has been focusing on drug targets that control bone mass and has compounds in preclinical development. Its lead candidate is an oral treatment with potential in stimulating the production of bone mass and reversing the effects of osteoporosis in post-menopausal women, therefore serving as alternative to hormone replacement therapy, which may increase breast cancer risk. Auxeris will add the candidate to its own pipeline, which contains an injectable treatment that may prevent cancerous cells from spreading into bones. This compound was identified at Washington University by Auxeris founders, Drs. Steven Teitelbaum and Patrick Ross. Auxeris says it hopes to have both candidates in clinical development within 18 months, with the first drug on the market by 2007. The company estimates that the current global osteoporosis market is $7.5bn and may increase to $14bn by 2011.

Axonyx Inc.

Oxis International Inc.

In a stock swap worth about $9.5mm, Axonyx is acquiring 13.9mm common shares of Oxis International, or 53% of the company's outstanding voting stock. For each Oxis share, Axonyx will issue 0.12mm shares of its own stock (worth $0.68 based on the 10-day average), representing an 8% premium. (Jan.)

Axonyx's chairman and CEO Marvin S. Hausman, MD already owns 4% of Oxis. The acquired company develops, manufactures, and markets products and technologies related to oxidative stress. Its OxisResearch line of products are used to test oxidative, anti-oxidant, nitrosative, and inflammatory biomarkers that may cause diseases such as cancer, diabetes, atherosclerosis, stroke, Alzheimer's disease, Parkinson's disease, amyotrophic lateral sclerosis, and mad cow disease. The company's lead candidate, BXT-51072, is initially being developed for treating inflammatory bowel diseases, but has already shown efficacy in a preliminary Phase II trial for ulcerative colitis patients, with potential in treating other inflammatory conditions. Axonyx says the acquisition complements its neurodegenerative therapeutic program, diagnostic technologies for oxidative stress, and pipeline of anti-oxidant nutraceuticals. Following the deal, Oxis will continue to operate in Portland, Oregon.

Gradipore Ltd.

Serologicals Corp.

Australian separation technologies company Gradipore has acquired Serologicals Corp.'s (biological research products) therapeutics plasma business, including management and most of the 180 staff members. (Dec.)

Gradipore will pay $18mm--about 64% of the division's 2003 sales--$5mm in cash ($3.5mm now and $1.5mm in February) and the remainder through the issuance of a secured promissory note. Serologicals says exiting this business will enable it to focus on its life science research, drug discovery, development, and manufacturing. Earlier this year, the company bought Chemicon International in a $95mm transaction to grow its cell culture products and diagnostic antibodies. The addition of the therapeutics plasma unit, which consists of ten plasma collection centers and a central testing laboratory in Atlanta, will allow Gradipore to transform itself into a niche plasma therapeutic supplier, give it the opportunity to acquire a source of hyperimmune plasma, and increase its profits by an estimated $1.5mm. The company's technologies and products, which focus on hematological and separations technologies for the life sciences industry and blood clotting tests for genetic disorders, enable R&D of biological products for disease detection and pharmaceutical manufacturing. Its major platform is Gradiflow, a membrane-based process mostly used in the simultaneous removal of viral and bacterial pathogens and purification of proteins in large-scale biological separations. Investment Banks/Advisors: Corporate Venture Associates (Gradipore Ltd.)

Invitrogen Corp.

BioReliance Corp.

Invitrogen (develops, manufactures, and sells research tool kits for genomics, proteomics, bioinformatics, and cell biology) is acquiring BioReliance, a contract service organization that provides testing, development, and manufacturing services for the biotech and pharmaceutical industries. The acquisition price--$500mm including the assumption of about $70mm in debt--is 5.6 times sales for the 12-month period ending Sept. 2003. (Dec.)

Invitrogen will make a cash tender offer of $48 for each BioReliance share (an 11% premium to market). BioReliance's latest 10Q showed a cash position of about $17mm. It will retain its name and become part of Invitrogen's bioproduction business segment, which currently sells media, sera, reagents, customized packaging, cell lines, specialized testing, and technical and regulatory support to biotech and pharmaceutical companies. The new subsidiary will focus on its current line of services and on providing new services and technologies needed to improve drug development. BioReliance's offerings include characterization of cell banks; release testing of bulk and final product; viral and DNA clearance studies; full analytical characterization of proteins and peptides; stability testing; genetic, mammalian, and molecular toxicology; biodistribution studies; and comprehensive serology and PCR testing for laboratory animals.

Keryx Biopharmaceuticals Inc.

Access Oncology Inc.

Keryx Biopharmaceuticals (therapies for cancer and diabetes) is acquiring private cancer biotech Access Oncology. Keryx will assume $7.5mm in debt and, upon achievement of defined clinical, regulatory, and sales achievements, would issue up to 4mm shares of common stock (they are currently trading at about $4.55 each) for all shares of Access. (Jan.)

Specifically, the earnouts include the issuance of 500k shares upon commencement of the first Phase III trial, 750k when the FDA accepts the first NDA, 1.75mm when the first drug is approved, 500k if the drug attains $100mm in sales, and the final 500k shares if sales hit $250mm. The deal gives Keryx three key cancer candidates, which will be renamed KRX-0401, KRX-0402, and KRX-0403; they have been developed with support from the National Cancer Institute. The oral AKT inhibitor, KRX-0401, is currently in Phase II trials against sarcoma and cancers of the breast, head and neck, pancreas, skin, and prostate. KRX-0402 is in several Phase II clinical trials as an inhibitor of DNA repair, and KRX-0403 is expected to enter Phase II in 2004. Keryx will add the compounds to its own pipeline that includes lead candidate, KRX-101 (sulodexide), in Phase II for the treatment of diabetic nephropathy. As part of the acquisition, Access Oncology's president and CEO I. Craig Henderson, MD will take a seat on Keryx's board and lead its oncology efforts. Investment Banks/Advisors: Ryan Beck & Co. (Keryx Biopharmaceuticals Inc.)

Medeus UK Ltd.

Elan Corp. PLC

Elan Corp. PLC has agreed to sell its European sales and marketing business to Medeus UK Ltd., a newly formed pharma company, for $120mm (€96.8mm). (Dec.)

Medeus gets the UK sales and marketing operations and full equity in Elan's sales and marketing affiliates in Germany, France, Spain, Italy, and Ireland. These operations brought in net revenues of $70.1mm in 2002 and $56.4mm for the first nine months of 2003. The business unit's employees will stay on as part of Medeus. Elan is planning to keep its operations in Athlone, Ireland and its R&D operations in Stevengage, UK, but intends to sell rights to two products in the UK and Ireland for about $10mm. Investment Banks/Advisors: Apax Partners (Medeus UK Ltd.)

Ranbaxy Laboratories Ltd.

Aventis SA

Laboratoire RPG Aventis

OPIH SARL

India's Ranbaxy Laboratories has acquired Aventis's generics unit Laboratoire RPG Aventis and RPG's OPIH SARL subsidiary (generics) for about €70mm ($80mm). (Jan.)

RPG, which had 2002 sales of about $55mm and has a staff of about 80 people, specializes in cardiovascular, anti-infective, gastrointestinal, non-steroidal anti-inflammatory, neurology, and analgesic drugs. It has a portfolio consisting of 52 molecules and is Aventis's only generics business. RPG will retain its name because of its strong brand equity and visibility in the French generics market, where it is the fifth biggest player. The deal satisfies Ranbaxy's strategy of expanding its business in Europe; the acquisition should land the company a spot on the top 10 list of European generics companies. Aventis had been seeking an exit from generics to focus on the development and sale of prescription drugs and vaccines.

Sanofi-Synthélabo

Aventis SA

After weeks of speculation, Sanofi-Synthélabo has launched--with the support of the French government--a hostile bid to acquire its larger rival Aventis SA for €48.3bn ($US60mm)--19% in cash and 81% in stock. Sanofi claims the combined pharmaco--which would be ranked the third-largest worldwide in global sales--would have one of the largest R&D budgets in the industry (at €4bn) and would feature a pipeline of almost 60 late-stage candidates. Its therapeutic focus would include cardiovascular/thrombosis, CNS, oncology, diabetes, and urology. (Jan.)

Sanofi has offered 5 of its shares (valued at €58.73 apiece) plus €69 in cash for every 6 Aventis shares, representing about a 12% premium over Aventis's market average 10 days prior to the offer. Aventis had 2002 revenues of €17.6bn, while Sanofi's revenues for the same period were only €7.4bn, but Sanofi's market cap (€42.3bn) approaches that of Aventis's (€46.2bn). Sanofi says the merged company would benefit both parties, boasting pharmaceutical sales of almost €22bn, cost savings of €1.6bn, increased life-cycle management expertise, and greater marketing opportunities in the US and Japanese markets with a portfolio of 9 marketed products that together generated over €500mm in 2003 sales. Aventis executives have rejected the bid claiming the deal would grossly undervalue it, could result in the loss of as many as 12,000 jobs, and would force the company to shoulder Sanofi's risk. Sanofi-Synthélabo's top sellers include Ambien and Plavix, each of which had 2003 sales of more than €1.3bn. Its development pipeline includes 55 compounds, 22 of which are in Phase II or III. Strasbourg-based Aventis's strong portfolio of marketed pharmaceutical products, including Lovenox, Taxotere, and Allegra, had 2003 sales of €14.7bn. While Sanofi's pipeline has more candidates, Aventis has greater R&D resources, with a 2002 budget of €3.1bn. Sanofi made the offer to avoid becoming itself a target for a takeover by a larger European pharmaceutical firm as it faces at the end of 2004 the loss of two of its largest shareholders Total and L'Oreal, which together hold a 44% stake, but control 63% of the company. Before proceeding, Sanofi needs to obtain at least 50% of Aventis' issued share capital and voting rights. The company is hopeful the transaction will close by the second quarter this year. Investment Banks/Advisors: Merrill Lynch & Co. Inc. (Sanofi-Synthélabo); Rothschild Inc.; Goldman Sachs & Co.; Morgan Stanley & Co. (Aventis SA)

Strakan Group Ltd.

OTL Pharma SA

To expand its commercial operations in Europe, attract additional in-licensing partners, and increase its therapeutic areas, Strakan Group Ltd. (bone and skin disease therapeutics) has acquired specialty drug in-licenser and developer OTL Pharma SA in a cash and stock transaction. (Jan.)

Strakan will pay €6mm ($7.7mm)--€1mm in cash and the remainder in Strakan shares--about 23% more than OTL's 2003 revenues. Additionally, OTL could get a cash earnout of up to €1mm if it meets certain sales goals by mid-2005. The company will retain the Strakan name, its CEO (Harry Stratford), and its Scottish headquarters, and add a Paris subsidiary for commercial operations (Strakan Europe) to be led by Jean-François Labbe, OTL's current CEO. Founded in 1998, OTL has a portfolio of eight products--all of which are already marketed in at least one European country--acquired from large pharmaceutical companies. It specializes in small-volume niche products, Orphan drugs for rare diseases, pediatric and geriatric therapies, and proven treatments for unmet medical needs in areas such as immune disorders, cancers, nausea and vomiting, acute psychiatric conditions, congestive heart failure, hypertension, and pre-eclampsia. Strakan has products primarily in the women's health, men's aging, and skin and bone disorders markets.

Tranzyme Inc.

Neokimia Inc.

Tranzyme (functional biology) has acquired Neokimia, a privately held company focusing on using medicinal chemistry platforms to quickly create lead candidates. (Dec.)

Tranzyme will now have a portfolio of compounds that are in late stages of optimization and may have two candidates in clinical development next year. It also gets established collaborations for HIV, cancer, and cystic fibrosis. Tranzyme has used its gene delivery and expression technology to develop therapeutics to treat diseases of the neurosensory system (eye, ear, and brain conditions). Neokimia has created therapeutics not only for gastrointestinal disorders and metabolic diseases (its primary focus), but these compounds also work on GPCRs and other cell-surface receptors in the neurosensory system, including the brain. Tranzyme will keep its headquarters in Research Triangle Park, North Carolina and continue drug discovery operations in Sherbrooke, Quebec. Vipin K. Garg, PhD will retain his title of president and CEO, as Caroline Fortier (Neokimia's president and CEO) is leaving the company. The proceeds of Tranzyme's $6mm financing this month will be used to set up operations and for preclinical development activities. Investment Banks/Advisors: Vengate Capital Partners (Tranzyme Inc.); Vengate Capital Partners (Neokimia Inc.)

Xechem International Inc.

Ceptor Inc.

Xechem International (drugs for orphan diseases) acquired privately held biotech company Ceptor in a reverse acquisition. Xechem issued $6mm of its convertible stock to Ceptor, and also took on about $300k in debt. (Dec.)

Ceptor will be the surviving entity. As part of the deal, Ceptor is eligible for milestone payments based on developmental progress of its compounds in clinical trials and achievement of regulatory approvals. Xechem gains an opportunity to expand its Orphan drug pipeline with access to Ceptor's neuromuscular projects that include the Neurodur and Myodur drug targeting candidates. Both act by binding to specific membrane transporters in order to be deposited within diseased cells--Myodur targets skeletal and cardiac muscle while Neurodur goes for neuronal cells. Ceptor's technology allows for the potential to develop treatments for muscular dystrophy, multiple sclerosis, amyotrophic lateral sclerosis (ALS; Lou Gehrig's disease), epilepsy, ototoxicity (ear poisoning), nerve damage, and muscle wasting; the companies intend to file at least 2 IND applications within the year.

Joint Arrangements

Abbott Laboratories Inc.

Critical Therapeutics Inc.

SkyePharma PLC

Following Abbott Laboratories' decision to discontinue production of its asthma drug Zyflo, SkyePharma PLC and critical care medicine company Critical Therapeutics Inc. have picked up the generic--zileuton--and will develop a controlled-release formulation to treat asthma as well as chronic obstructive pulmonary disease (COPD). (Jan.)

In 1997, SkyePharma and Abbott signed a deal to develop a formulation of the Abbott compound using SP's Geomatrix predetermined drug release platform. Abbott sold the resulting product as immediate-release Zyflo through 2003, when it decided to pull the drug due to market saturation in the asthma indication. SkyePharma gets money up front, and both Abbott and SkyePharma will receive milestones, in addition to royalties on net sales of the final product. Following FDA approval, Critical Therapeutics will be responsible for manufacturing IV formulations. Abbott will manufacture tablets for CTI, which will market the drug with its own sales force in the US and reimburse SP for development costs. SP and Critical Therapeutics will continue work on the controlled-release version, which Abbott has already brought through Phase III. Zileuton is an oral leukotriene pathway inhibitor that controls inflammation, swelling, mucus production, and bronchoconstriction in the airways of patients with respiratory ailments.

Abbott Laboratories Inc.

Protein Design Labs Inc.

Roche

Abbott Laboratories received an exclusive license from Protein Design Labs (develops humanized antibody therapeutics) to intellectual property associated with antibodies that can bind interleukin-12 (IL-12) or its receptor. (Dec.)

Abbott pays PDL an up-front fee, possible development-based milestones, and sales royalties on any antibodies it develops against IL-12. PDL originally licensed rights related to anti-IL-12 therapy from Roche, which will receive part of the money paid by Abbott. Abbott will use the licensed IP to continue Phase II development of its ABT-874 (formerly J695), a fully human anti-IL-12 monoclonal antibody for autoimmune diseases including Crohn's disease and multiple sclerosis. The deal does not cover rights to PDL's SMART a humanized antibody technology that enables the development of therapeutic antibodies, which are more acceptable to the human body and less immunogenic than mouse antibodies.

Able Laboratories Inc.

Tris Pharma Inc.

Tris Pharma (drug delivery) has agreed to help Able Laboratories (generics) develop up to five specialty liquid formulations of compounds using Tris' controlled release and enhanced solubility technologies. (Dec.)

Able is responsible for clinical trials and upon approval, will manufacture and market any resulting products. Able gets technology rights to the products and will provide developmental milestones and royalty payments. Tris will exclusively supply Able with active raw materials (that have been treated with its technology). Able has made a $750k equity investment in Tris through the purchase of a three-year, 5% senior subordinated note. It can either be repaid through milestones or over the term of the note at $250k annually. Tris will use the funds to expand its current manufacturing facilities.

Access Pharmaceuticals Inc.

Wyeth

Wyeth Consumer Healthcare

Access Pharmaceuticals has licensed Wyeth Consumer Healthcare exclusive North American rights to develop and sell over-the-counter products based on its OraDisc drug delivery technology. (Jan.)

In exchange for rights to market the resulting product in the US, Canada, and Mexico (with an option to get worldwide rights), Wyeth will pay an up-front licensing fee, milestones, and will purchase the final product from Access for sale in the licensed territories. The OraDisc platform aids in the localized release of drugs delivered to mucus membranes through the use of a mucoadhesive polymer film. The film adheres to the affected membrane (i.e.--the mouth, in the case of canker sores) and slowly releases medication.

Acumen Pharmaceuticals Inc.

Merck & Co. Inc.

Acumen Pharmaceuticals (memory-related disorders) will work with Merck & Co. on the research and development of therapeutics and vaccines to treat Alzheimer's disease and other memory disorders. (Jan.)

Acumen gets an up-front payment, yearly research funding, and up to $48mm in research, development, and approval milestones for one resulting antibody product; it gets equal milestone payments for vaccines. The company will also receive sales royalties (an industry source said the royalties will be two digits) and milestones based on the achievement of certain sales levels. Merck will exclusively market them upon approval. Merck has gained an exclusive worldwide license to use Acumen's amyloid-derived diffusible ligand (ADDL) technology to create monoclonal antibodies and vaccines. ADDLs are soluble oligomeric groups of the amyloid beta 1-42 protein that were discovered by Acumen's founders in laboratories at Northwestern University and the University of Southern California. Researchers believe that they are the molecular structures that cause Alzheimer's and can spark the onset of early memory-related disorders. Antibodies that target ADDLs have been shown to prevent and reverse memory problems in animal studies.

Affymetrix Inc.

Perlegen Sciences Inc.

Galileo Genomics Inc.

Genomics firms Perlegen Sciences (division of Affymetrix) and Galileo Genomics will search for groups of genes associated with 21 common diseases by studying the DNA of 1,600 members of Quebec's founding population. (Jan.)

This is a group of about six million distantly related people descended from common ancestors who emigrated from France to Quebec during the 17th and 18th centuries. The companies hope by studying the variations found in the study group's genetic samples to construct a linkage disequilibrium map of 40,000 SNPs that may reveal connections between genes and disease. As a first project, Perlegen genotyping technology will read 200,000 variants supplied by Galileo, which will then apply its algorithms to identify disease genes. The partners also mean to relate genes to drug response. The deal calls for Perlegen to license certain intellectual property rights from Galileo.

Affymetrix Inc.

Perlegen Sciences Inc.

Pfizer Inc.

Affymetrix's Perlegen Sciences (genetics) will work with Pfizer to analyze drug response in patients suffering from major depression disorder. (Jan.)

Under terms of the agreement, Pfizer provides research funding and milestone payments to Perlegen. In an effort to discover genetic markers associated with drug response, Perlegen will use its technology to perform genotyping studies on single nucleotide polymorphisms (SNPs) in clinical samples. The companies hope to identify predictive genetic markers for drug response-related biological pathways. Such information can offer a better understanding of how to manage patients and develop more effective antidepressant therapeutics. Perlegen and Pfizer share rights to any drugs and diagnostics that come out of the deal. Also this month, the companies signed a similar deal in the area of metabolic syndrome.

Affymetrix Inc.

Perlegen Sciences Inc.

Pfizer Inc.

Affymetrix's genomics division Perlegen Sciences and Pfizer are collaborating to perform genetic research studies in the area of metabolic syndrome. (Jan.)

Perlegen will utilize its technology to genotype single nucleotide polymorphisms (SNPs) in patient samples it has collected, with the goal of identifying genetic markers associated with metabolic syndrome. Both companies will share rights to any therapeutics and diagnostics that result from the collaboration. Pfizer will provide research funding and milestone payments to Perlegen. The companies hope to gain better insight into metabolic conditions including insulin resistance, myocardial infarction, atherosclerosis, central obesity, elevated triglycerides, low HDL, high LDL, hypertension, and Type II diabetes. This deal represents one of two signed this month between Pfizer and Perlegen; they are also partnering to analyze drug response in patients with major depression disorder. In December 2002, the companies signed a collaboration to identify genetic factors that contribute to cardiovascular disease.

Akzo Nobel NV

NV Organon

Atrix Laboratories Inc.

Sosei Co. Ltd.

Sosei Co. Ltd., which a year ago licensed exclusive Japanese rights to develop and market Atrix Laboratories' Eligard for treating advanced prostate cancer, announced it will be co-promoting the drug with Nippon Organon KK, the Japanese presence of Akzo Nobel's Organon group. (Dec.)

Eligard, an LHRH agonist, is leuprolide acetate for injectable suspension. Several dosage formulations (lasting between one and three months) are already sold in the US by Sanofi Synthelabo, and the drug has received approvals in Canada, Germany, Argentina, and elsewhere. Sosei is conducting clinical trials of its one-month formulation, SOT-375, and is readying its marketing plans for Japan. Urology is one of Organon's key areas.

Alliance Pharma PLC

Alliance Pharmaceuticals Ltd.

Barrier Therapeutics Inc.

Neopharm Ltd.

Alliance Pharmaceuticals Ltd. (subsidiary of the former Peerless Technology Group, now Alliance Pharma PLC; develops and markets a wide range of niche therapeutics) and Israeli company Neopharm Ltd. (markets branded pharmaceuticals) have licensed sales, marketing, and distribution rights to dermatology drug company Barrier Therapeutics' dermatological products. (Dec.)

Alliance's rights cover the UK and Scandinavia, while Neopharm's cover Israel and Turkey. Initial efforts will focus on Barrier's lead product candidate, Zimycan, a topical ointment containing 25% antifungal miconazole; it is in Phase III clinical trials in the US and Latin America to treat Candida-associated diaper dermatitis. The company says that if the non-steroid candidate gains FDA approval, it will be the first prescription drug approved by the agency for this indication. Barrier has submitted regulatory filings in Europe and expects approval in Belgium in early 2004 and in other European countries later in the year. Barrier's other candidates include Liarozole, for which it is seeking Orphan drug status as a topical treatment for the genetic skin disease ichthyosis; Sebazole, in Phase III for seborrheic dermatitis; and Ketanserin, which has completed Phase II for chronic wounds.

Amgen Inc.

ViaCell Inc.

Cell therapy company ViaCell received a nonexclusive license to use Amgen's Flt3-ligand for ex vivo stem cell research. (Dec.)

ViaCell will fund research, early clinical development, and manufacturing activities, while Amgen handles expenses related to late-stage clinical trials and commercialization. Amgen also makes a $20mm equity investment in ViaCell and pays a $10mm milestone upon FDA approval of any resulting products. Both companies will equally share sales profits. Amgen gets the option to fund 50% of development costs associated with future collaborations with ViaCell. The licensed Flt3-ligand is a growth factor that is important for the survival, growth, and differentiation of hematopoietic stem cells. ViaCell is currently conducting Phase I/II trials on CB001, which is a highly purified population of stem cells that has been isolated from umbilical cord blood and multiplied using its patented Selective Amplification technology. The company believes CB001 may have potential in treating adults with leukemia and advanced stages of hematologic (blood) cancers who have undergone high-dose chemotherapy and radiation. In 2002, ViaCell licensed rights to another Amgen growth factor called stem cell factor.

Antares Pharma Inc.

ProSkelia SA

Antares Pharma (drug delivery systems) and Aventis spin-off ProSkelia (therapeutics for bone disease and hormone disorders) seek to develop products that deliver one of ProSkelia's clinical-stage compounds using Antares' proprietary ATD gel technology. (Jan.)

The agreement includes the option for the companies to license any developed products in the future. In clinical trials, Antares' gel technology has demonstrated its ability to deliver hormonal drugs through the skin. Because the system is adaptable and versatile, Antares hopes this collaboration results in ATD having applications in several therapeutic areas. Although the ProSkelia compound involved in the deal was not disclosed, the company says it has three candidates in clinical development in four indications--hormone replacement therapy, alopecia, acne, and osteoporosis.

Archemix Corp.

Johnson & Johnson

Janssen Pharmaceutica NV

Johnson & Johnson Pharmaceutical R&D LLC

Archemix Corp. (holds key patent estate in aptamer field) will use its technology to validate GPCR targets supplied by Johnson & Johnson Pharmaceutical R&D, which will provide undisclosed funding. (Jan.)

Aptamers are single-strand oligonucleotides that bind to target molecules much as antibodies do. In its own projects, Archemix is developing therapeutic uses, which involve modulation of protein/protein interaction (rather than blocking targets at the gene function level). The company says these nucleic acids are highly specific to their targets, show virtually no immunogenicity or toxicity, and are fast and inexpensive to synthesize. Archemix will be able to apply the discoveries that emerge from the agreement to its aptamer therapeutic programs. The company holds 150 issued and 300 pending patents covering the identification and use of any new therapeutic aptamers.

Array BioPharma Inc.

Genentech Inc.

Genentech will help Array BioPharma identify compounds for clinical development against two of Array's small-molecule cancer targets. (Jan.)

The collaboration also involves intellectual property associated with Array's drug discovery platform. Genentech will handle all clinical development of the compounds and receives a license to commercialize any resulting drugs. It also gets rights to add additional programs to the deal. In return, Array receives an up-front payment, funding for research, plus potential developmental milestones and sales royalties. The deal combines Genetech's expertise in oncology with Array's knowledge of small-molecule drug discovery.

AstraZeneca PLC

The Medicines Co.

The Medicines Co. has acquired an exclusive worldwide license (excluding Japan, China, Korea, Taiwan, and Thailand) to develop and market AstraZeneca's cangrelor. (Dec.)

AstraZeneca will get an up-front payment, regulatory milestones, and royalties. Cangrelor is a Phase II non-thienopyridine injectable compound that works directly on the P2Y12 platelet receptor to treat or prevent arterial thrombosis. The drug candidate, which has a plasma half-life of about ten minutes, has shown a capacity in clinical trials to halt platelet activation (within seconds of dose administration) and retain full platelet function in under one hour after the infusion is stopped. TMC will develop cangrelor for use as an antiplatelet agent in patients who undergo percutaneous coronary surgeries, including angioplasty and stenting. It may perform combined studies of the candidate with its Angiomax cardiovascular therapeutic.

Aventis SA

Aventis Pasteur Ltd.

Crucell NV

Vaccine developer Aventis Pasteur Ltd. and Crucell have entered into a second deal for Crucell's PER.C6 technology. Aventis will use the technology to further develop vaccines for both pandemic and epidemic influenza outbreaks. (Jan.)

Aventis gets worldwide rights (excluding sales rights in Japan) to research, manufacture, develop, and market cell-based flu vaccines designed using Crucell's technology. Crucell will receive milestones, annual payments, and R&D funding totaling €30mm ($38mm), as well as up to double-digit royalties on sales outside of Japan. For the excluded territory, Aventis will supply the vaccines to Crucell, and gets royalties in return. The PER.C6 platform is a human cell line made up of immortalized cells that can replicate indefinitely. It is used in the development of vaccines as well as antibodies, therapeutic proteins, and gene therapy products. Aventis will add the influenza vaccines to its portfolio that includes prophylactics for diseases such as chickenpox, cholera, diphtheria, meningitis, mumps, tuberculosis, and yellow fever, among others.

Aventis SA

Aventis Pasteur Inc.

Genome Therapeutics Corp.

For $3mm in cash, Aventis' vaccine unit Aventis Pasteur Inc. has purchased Genome Therapeutics' pending patent applications associated with important gene and protein sequences from the Streptococcus pneumoniae genome. (Jan.)

Genome Therapeutics keeps certain intellectual property rights related to its pathogen genetic sequence database and infectious diseases diagnostics program. Aventis hopes to use the IP to develop prophylactic vaccines aimed at unmet medical needs; S. pneumoniae is often resistant to antibiotics commonly used today. The bacterium causes respiratory tract and ear infections, as well as meningitis, and is thought to lead to 25% of the community-acquired pneumonia in the US annually.

Aventis SA

Aventis Pharma AG

Aventis Pharmaceuticals Inc.

UroGene SA

Aventis Pharmaceuticals licensed UroGene SA (target validation for urological cancers) exclusive development and commercialization rights to besipirdine, a C-fiber inhibitor that UroGene will develop to treat overactive bladder (OAB). (Jan.)

Aventis, which holds an equity stake in UroGene, gets milestones and royalties. Aventis had tested the compound up to Phase III trials for Alzheimer's disease, but it failed to show efficacy for that indication. UroGene demonstrated that besipirdine has potential in OAB--a disorder with a market potential of about $1.2bn--and plans to initiate Phase II clinical trials during the third quarter of 2004.

Bayer AG

Bayer HealthCare AG

Galapagos Genomics NV

Galapagos Genomics NV (functional screening in human disease models) will use its SilenceSelect and FLeXSelect gene knock-down technologies to discover and validate druggable genes for Bayer HealthCare AG. (Dec.)

Bayer gets exclusive rights to validated targets; Galapagos gets up-front payments, research funding, and milestones. SilenceSelect is a collection of adenoviruses with siRNA-based knock-down sequences. The technology targets over 4,000 human genes that belong to druggable gene families. FleXSelect is an arrayed collection of adenoviruses with full-length genes in druggable gene families--of interest for small-molecule drug development--that enables the study of gene function in human primary cell systems.

Bayer AG

Bayer HealthCare AG

Cenix BioScience GMBH

Over less than a nine-month period, RNA research company Cenix BioScience GMBH (focuses on cancer and viral diseases) will apply its high-throughput RNA interference (HT-RNAi) screening platform to over 6,000 genes using cell-based assays it developed with Bayer. The companies' aim is to identify and validate therapeutic targets for several disease indications. (Dec.)

Cenix gets up-front and research payments, in addition to milestones; Bayer gets an option to license IP resulting from the agreement. The companies will screen all known human druggable genes using RNAi to characterize the targets. Cenix claims it is the first biotech company to specialize solely in HT-RNAi, a drug discovery method that uses double stranded RNA as the triggering agent to obtain targeted silencing of genes. (RNA is a naturally occurring, highly catalytic gene regulation system that scientists think evolved primarily as a defense mechanism against molecular pathogens.) Cenix's platform, designed with its proprietary algorithms, combines high content phenotypic analyses with the genome-wide short-interfering RNA (siRNA) libraries it created through a deal signed with Ambion Inc. in March 2003. Cenix has used the platform in experimental systems that include human cells, Drosophila, and C. elegans.

Bayer AG

Bayer HealthCare AG

Cellzome AG

Functional proteomics company Cellzome (focuses on Alzheimer's disease) will apply its proteomics platform technology to Bayer HealthCare AG's lead compounds to identify protein interaction profiles in a variety of therapeutic areas. Bayer will use resulting information in its drug development programs. (Dec.)

Although Cellzome gets a technology access fee and research funding for one year, it sees the deal as a first step in a long-term relationship between the companies. Cellzome's platform utilizes both chemical proteomics and pathway expansion to identify targets in the human proteome, which then get mapped on cellular pathways. Using existing drugs and pharmacologically active compounds, the technology helps detect the links among the drug or candidate, its protein target, and the disease pathway in a variety of cell types and tissues.

Boehringer Ingelheim GMBH

Chiron Corp.

Chiron licensed Boehringer Ingelheim GMBH nonexclusive rights to use its technology to research, develop, and market small-molecule drug candidates to treat hepatitis C. (Dec.)

Chiron gets license fees, milestones, and royalties for any drugs created using its technology. One of three global healthcare segments in which Chiron participates is biopharmaceuticals (the other two are vaccines and blood testing) where it focuses on technologies related to therapeutic proteins, small molecules, and vaccines to treat cancer and infectious disease. The company says it has over 100 HCV-related patents (in over 20 countries) including some directed to hepatitis C polypeptides encoded throughout the genomes of HCV. These polypeptides have a variety of medical applications, including therapeutic targets for drug screening.

Bristol-Myers Squibb Co.

Lexicon Genetics Inc.

Bristol-Myers Squibb and Lexicon Genetics (knock-out technology to identify roles of disease-causing genes in murine models) are launching a joint effort in medicinal chemistry and preclinical development to discover, develop, and market small-molecule drugs for targets in the areas of depression, anxiety, schizophrenia, pain, and Alzheimer's disease. (Dec.)

Lexicon gets an up-front payment of $36mm, at least $30mm to fund new research over the next three years, and clinical and regulatory milestone payments of up to $76mm for each new compound Bristol develops. The company also gets additional cash payments if it exceeds specified research productivity levels and is eligible for double-digit royalties. BMS and Lexicon have agreed to equally share all preclinical costs, but the party that ultimately manages the clinical development and commercialization of drugs resulting from the alliance--and Bristol gets first option--will take responsibility for those costs involved. Lexicon is contributing 13 of its 14 drug discovery programs in the area of neuroscience, a field of increasing interest and focus for Bristol, which recently established a new business unit dedicated to this therapeutic area and has a new schizophrenia drug Abilify (aripiprazole). One of Lexicon's drug discovery programs, LG617, for learning and memory disorders, is excluded from the deal, but Bristol has an option to negotiate for it separately. Lexicon is also offering Bristol access to any of its future drug discoveries in neuroscience from its gene analysis program Genome5000, under which it is analyzing 5,000 genes using its knockout technologies. If BMS decides to extend the agreement for two more years, Lexicon will receive an additional $50mm payment to fund the research.

Chiron Corp.

ZymeQuest Inc.

Chiron and blood transfusion company ZymeQuest have entered into an agreement for the development and marketing of ZymeQuest's enzymatic blood conversion system. (Jan.)

The companies will share development and commercialization costs. Chiron will make an undisclosed equity investment in ZymeQuest and will have worldwide marketing rights to the technology, while ZymeQuest retains development and manufacturing responsibilities. The system works by converting Type A, B, and AB red blood cells into enzyme-converted group O (ECO) red blood cells. The goal is to decrease the risk of transfusion reactions in mismatched patients (since type-specific blood is necessary in transfusions between these blood types, and Type O blood is the only group that can be transfused to anyone without causing a reaction) by providing a universally accepted blood product to blood banks. Chiron's Blood Testing division will use the technology to continue its efforts towards the safe use of donated blood in patients requiring transfusions.

Cortical Pty. Ltd.

Genzyme Corp.

Genzyme and Australian drug discovery company Cortical have entered into an agreement to develop oral drugs for inflammatory diseases based on the inhibition of the macrophage inhibitory factor (MIF). (Dec.)

The companies will collaborate on R&D through Phase II trials, after which Genzyme will have exclusive worldwide development and marketing rights to candidates the companies design. Genzyme made an up-front equity investment in Cortical of $424k ($Aus424k) and will make $320k in additional investments as developmental milestones are achieved. Cortical gets royalties on sales of future products, and also retains rights to MIF antagonists for localized uses. The companies will concentrate on developing treatments that block the activity of MIF, a protein involved in inflammatory diseases. Possible indications include rheumatoid arthritis, multiple sclerosis, and colitis. Genzyme will add any developed candidates to its pipeline of compounds, which already includes a variety of treatments for cancer, cardiovascular conditions, and diseases of the immune system.

Curis Inc.

Wyeth

Wyeth Pharmaceuticals

Regenerative medicine company Curis has licensed Wyeth Pharmaceuticals its preclinical Hedgehog proteins and small-molecule Hedgehog pathway agonists for the development of neurological disorder therapeutics. (Jan.)

Curis gets a license fee (of cash and equity), research funding from Wyeth for no less than 2 years, and clinical development and regulatory milestones. The agreement could bring Curis over $170mm if at least 2 products are successfully developed. Wyeth will also pay variable royalties on sales volume of resulting products. While Wyeth is getting rights for neurology, Curis will retain development and licensing options for the Hedgehog program in orphan drug indications, topical use for hair growth, local delivery for cardiovascular disease, and use of the technology for stem cell replication in the brain. However, Wyeth gets an option to acquire the cardiovascular applications and orphan drug indications at a later time. Hedgehog proteins and small-molecule Hedgehog pathway agonists have shown positive results in promoting the healing of nerve tissues in patients with neurological disorders such as Parkinson's disease and stroke.

Cypress Bioscience Inc.

Pierre Fabre SA

Pierre Fabre Medicament

Forest Laboratories Inc.

Cypress Bioscience (pain and CNS disease treatments) licensed Forest Laboratories development, sales, and marketing rights in the US to milnacipran in a deal that could be worth up to $250mm. (Jan.)

Cypress originally licensed the compound from Pierre Fabre Medicament, and currently has it in Phase III trials to treat fibromyalgia (FMS). Total up-front and milestone payments to Cypress are estimated to be between $200-250mm in addition to royalties. Forest will fund all future development activities (though both companies will manage development), and Cypress retains the option to co-promote to up to 25% of the targeted physicians. Milnacipran has shown positive clinical results in reducing the levels of pain and other symptoms associated with fibromyalgia--a chronic pain syndrome that causes physical and psychological symptoms including irritiable bowel syndrome, tension headaches, non-cardiac related chest pain, and lower back pain. The drug is a reuptake inhibitor that acts on the neurotransmitters norepinephrine and serotonin without causing common side effects associated with the use of tricyclic antidepressants (a therapy also prescribed for FMS).

Devax Inc.

Sun Biomedical Ltd.

Biosensors International Pte. Ltd.

Occam International BV

Occam International BV will provide coating services to apply its antiproliferative drug Biolimus A9 to a stent designed by Devax Inc. Occam is one of the cardiovascular device affiliates of the Japanese holding company Sun Biomedical Ltd. (Jan.)

Occam gets clinical milestones and a sales royalty. The stent is Devax's Y-shaped Axxess Bifurcation Stent, the uncoated version of which has been approved in Europe. The mesh cylinder, inserted into a coronary artery after balloon angioplasty, is shaped for treating bifurcation lesions; these blockages occur in about 30% of cases and usually are more prone to restenosis than the lesions in non-branched areas of the artery. Occam has Biolimus A9 (incorporated into its own stent, the Matrix) in European clinical trials; Terumo has rights to that combination.

Diversa Corp.

DSM NV

DSM Pharmaceutical Products

The pharma chemicals division of DSM Pharmaceutical Products (drug intermediates; part of chemicals company DSM NV) and Diversa Corp. (discovery and optimization based on genomic technologies) will collaborate to find and develop biocatalysts that make chemical transformation processes simpler and less expensive. (Jan.)

DSM will identify the transformations to focus on and will pay R&D support and milestones, in addition to royalties on resulting products. Diversa's job will be to develop the needed catalysts, then scale up the production processes for manufacturing pharmaceutical intermediates and active ingredients. DSM, which has developed two dozen industrial-scale processes based on enzymatic catalysis, says biocatalysis is becoming the preferred method for producing chiral compounds, as the required syntheses are less complicated, cost-effective, and more sustainable as production processes.

Diversa Corp.

Xoma Ltd.

Diversa Corp. (genomics-backed discovery technology) and Xoma Ltd (therapeutic proteins) will share technologies in a collaboration aimed at developing and producing antibody products. (Jan.)

Diversa gets a license to use Xoma's expression technology in developing antibody products on its own or with other partners, plus the option to produce antibodies under Xoma's patents. Xoma gets a license fee and will be eligible for milestones and royalties; these payments will be small, Diversa told an industry publication. In the second portion of the deal, in which the potential money (R&D support, milestones, and royalties) is more substantial and will go from Xoma to Diversa, the companies will combine their technologies to find and develop antibodies for treating autoimmune diseases. The project will apply Diversa's Antibody Building System (ABS) along with Xoma's bacterial cell expression system. ABS can re-engineer sub-optimal MAbs to improve their stability, solubility, and affinity; it can also be used to generate antibodies de novo, even against difficult targets, using a synthetic library of more than a billion clones as a basis. Xoma's expression system is a package more than two dozen companies have licensed for producing a variety of immunoglobulin antibodies in bacteria.

E-Z-EM Inc.

Schering AG

Berlex Laboratories Inc.

E-Z-EM (contrast media for GI tract radiography) will create a new version of its EmpowerCT injector system to accommodate Schering AG division Berlex Laboratories' Ultravist pre-filled cartridge. (Dec.)

Berlex will manage all chemistry, manufacturing, and regulatory activities needed to get Ultravist approved in the US; both companies will share the development expenses. The project is expected to be completed within the next year-and-a-half to two years. Upon approval, Berlex and E-Z-EM will co-promote the product to US customers for a five-year period. Ultravist is a nonionic iodinated contrast agent that is administered for intravenous and intra-arterial X-ray imaging. It was first introduced in 1985 in Europe and 1995 in the US and is now sold in over 100 countries worldwide. EmpowerCT is an automated device that intravenously administers contrast agents to patients during CT or other imaging exams.

Elite Pharmaceuticals Inc.

Pivotal Development LLC

Elite Pharmaceuticals (drug delivery) and Pivotal Development (partners with pharmaceutical formulators, providing drug development, regulatory, and commercialization support; focuses on generics) through established marketing companies. (Dec.)

The unnamed drug is the generic equivalent of a product that will soon go off patent and covers a market that has revenues of about $150mm annually. Elite gets technology access fees and the option to jointly develop a controlled-release NDA compound. Pivotal will be in charge of taking the Elite formulation through clinical development and gaining FDA approval. At some predetermined point in the development of the drug, the two parties will attempt to get a licensee to market the product; Elite and Pivotal will share milestones and revenues when the compound is out-licensed. Pivotal was recently formed to partner with drug delivery companies, assisting with drug development and regulatory programs that gain FDA approval for compounds. It then works with marketing companies to commercialize the resulting products.

Endo Pharmaceuticals Holdings Inc.

Endo Pharmaceuticals Inc.

EpiCept Corp.

Endo Pharmaceuticals (pain management products) has received an exclusive worldwide license to certain EpiCept (topical delivery of pain medications) patents and its LidoPAIN BP therapeutic. (Dec.)

EpiCept will receive milestones and royalties on net sales of LidoPAIN BP and has the option to co-promote the product. LidoPain BP is a lidocaine-based patch that is in Phase II studies to treat the acute form of lower back pain. Endo's Lidoderm (lidocaine patch 5%) is in development to treat the chronic type. The company is hoping to market the two products together to treat a variety of problems in the area of back pain, which is reported to be the second leading cause of medical problems, influencing employee work attendance and level of productivity.

Epigenomics AG

Wyeth

Epigenomics (personalized medicine) will analyze biomarkers in a murine xenograft model that has received a Wyeth cancer drug candidate. (Dec.)

Wyeth will provide preclinical samples of the compound and after Epigenomics analyzes the biomarkers, it will evaluate them to decide if it will include Epigenomics' DNA-methylation technologies in cancer trials. (DNA-methylation controls gene expression, enabling researchers to determine patterns in both healthy and diseased cells.) The resulting biomarkers may help physicians decide which group of patients will get the most benefit from the cancer drug.

Exeter Life Sciences Inc.

PPL Therapeutics PLC

PPL Therapeutics (Scotland) Ltd.

Exeter Life Sciences (a holding company with business units specializing in human, plant, and animal health products) has acquired PPL Therapeutics (Scotland) Ltd.'s (cloned animals) nuclear transfer patents and related IP for £0.76mm ($1.35mm) in cash. (Dec.)

The technology was originally developed by the Roslin Institute and was used to clone sheep but has yet to be implemented in product development programs. PPL Therapeutics cloned Dolly the sheep in 1996 and was the first company to market cloned pigs for organ transplantation in humans. PPL Therapeutics had announced in early November that, since it could not locate a buyer for the company after the failed development of a drug candidate to treat lung disorders, it would be divesting plant, manufacturing, and laboratory equipment via an auction to bring in an estimated £169k. The company has since sold its office and laboratory to the Biotechnology and Biological Sciences Research Council for £1.2mm.

Ferring Pharmaceuticals AS

Novartis AG

Novartis Pharma AG

Ferring Pharmaceuticals acquired worldwide manufacturing, marketing, and distribution rights to the hormone treatment Norprolac from Novartis Pharma AG. (Jan.)

Norprolac--indicated for the treatment of hyperprolactinemia--blocks the production and release of the hormone prolactin in patients experiencing infertility problems (mainly ovulation suppression) due to prolactin overproduction. Ferring will add the therapy to its growing endocrinology and female reproductive health line, which includes Bravell, Lupron, Follistim, Crinone, and Pergonal--all indicated to act on the ovaries, follicles, and various hormones associated with the female reproductive system.

Fresenius AG

Xcyte Therapies Inc.

Xcyte Therapies (immune system therapeutics) has licensed Fresenius Biotech GMBH exclusive European rights to use its Xcellerate technology to develop treatments for HIV/AIDS. (Jan.)

In exchange for the license, Xcyte will receive milestones as well as royalties on sales of any future products. The Xcellerate platform was designed to manufacture and activate human T cells outside of the body as a way of increasing their number and stimulating immune response in diseased individuals. Fresenius will use the technology to build on its gene therapy approach for HIV/AIDS infection. The company has developed a preclinical T cell treatment for patients that removes a portion of a T cell, replaces it with an anti-HIV gene, and then infuses the T cell back into the patient. The goal is to build on the replication ability of "helper" T cells to enhance the immune system's response to HIV/AIDS infection in a way that is not as toxic as standard antiviral treatments.

Fujisawa Pharmaceutical Co. Ltd.

Fujisawa Healthcare Inc.

Roche

Fujisawa Healthcare has signed on Roche to distribute its Protopic (tacrolimus) eczema product in South and Latin America. (Jan.)

Roche will exclusively sell Protopic in Mexico, Brazil, Chile, Colombia, Ecuador, Peru, Venezuela, Central America, and the Caribbean. The drug, an immunomodulator, is a topical ointment approved to treat both short- and long-term moderate to severe eczema. In a deal signed last year, GlaxoSmithKline licensed exclusive marketing rights to Protopic in the US pediatric market; it is also sold in Japan, Canada, Europe, and parts of Asia.

Genaissance Pharmaceuticals Inc.

Novo Nordisk AS

Leading diabetes drug company Novo Nordisk licensed Genaissance Pharmaceuticals' (DNA-based diagnostics and therapeutics) HAP technology to use in its drug development efforts. (Dec.)

In return, Genaissance receives license and service payments, and fees for genotyping clinical samples. It also gets rights to develop and commercialize certain diagnostic products and services. The HAP technology will allow Novo Nordisk to determine a patient's response to drugs through the study of genetic variation markers called haplotypes. Genaissance's HAP database of markers can be used to identify the pattern and organization of a patient's DNA. The resulting information can then be integrated into the development of new diagnostics and therapeutics based on pharmacogenomics.

GlaxoSmithKline PLC

SkyePharma PLC

GlaxoSmithKline licensed rights to use one of SkyePharma's dry-powder or metered-dose aerosol inhaler technologies in its development of respiratory drugs. (Jan.)

GSK provided up-front money and pays additional fees plus royalties to SkyePharma if it uses either technology type with current or future products. SkyePharma's SkyeHaler is a breath-activated multi-dose powder device, which offers an alternative to CFC-propelled metered dose inhalers; among its other CFC-free metered-dose inhaler offerings are SkyeFine and SkyeDrye. In December 2003 SkyePharma and Novartis agreed to co-develop a new product for asthma and chronic obstructive pulmonary disease that combines Novartis's bronchodilator with SkyeHaler and a powder formulation technology) platform SkyeProtect.

Innate Pharma SAS

Novo Nordisk AS

Innate Pharma SAS (anticancer immunotherapy based on nonconventional lymphocytes) licensed Novo Nordisk AS exclusive research, development, and commercialization rights to a new class of immunomodulatory antibodies based on a family of receptor targets expressed by natural killer (NK) cells. (Dec.)

Innate gets license fees, milestones, and royalties. Though the rights are for all indications--excluding those receiving Orphan status, to which Innate will retain some rights--the initial focus will be on cancer. Both companies will collaborate with Italian, French, and Swedish academic institutions to further research the candidates as cancer therapeutics, but Novo Nordisk will be the sole developer and marketer of any resulting products. NK cells, a subset of nonconventional lymphocytes in the human immune system, exert direct cytotoxity towards a wide range of tumor targets. Innate says that its approach, which relies on the body's innate immune response by activating the nonconventional NK cells and lymphocytes, improves upon most therapies being developed, such as those that focus on the antigen-specific immune response or use non-specific regulatory agents.

Meditech Research Ltd.

Novozymes AS

Novozymes Biopolymer AS

Meditech Research (focuses on hyaluronic acid and heparin to treat a variety of diseases) will work with Novozymes Biopolymer AS (specializes in using enzymes and microorganisms to create compounds) on the development of formulations of HyCamp using hyaluronic acid. (Dec.)

Novozymes has agreed to fund Phase II clinical trials of HyCamp, which combines Meditech's HyACT (Hyaluronic Acid Chemosensitiser Transport) technology and the chemotherapeutic agent irinotecan to treat colorectal cancer. Each company gets the exclusive right to use the other's intellectual property and any jointly developed IP; they will also share any profits if either party markets the licensed technology. Novozymes will manufacture biosynthetic hyaluronic acid using a new strain of Bacillus subtilis (a commonly used microorganism) that Meditech can utilize in its preclinical and clinical trials.

Merck & Co. Inc.

Metabasis Therapeutics Inc.

Metabasis Therapeutics (liver and metabolic diseases) and Merck & Co. will work together on the research, development, and marketing of small-molecule therapeutics for the hepatitis C virus (HCV). (Jan.)

Merck has paid an up-front fee and has agreed to fund Metabasis' research efforts to identify and synthesize HepDirect prodrugs of the compounds Merck lends to the collaboration. Merck will then exclusively develop and market resulting HepDirect drugs, paying Metabasis milestones and royalties. On the first anniversary of the agreement, Merck gets the option to extend the exclusive use of HepDirect for HCV. If it chooses to do so, Metabasis gets another fee, plus milestones and royalties. If Merck selects a HCV product (that was independently discovered by Metabasis) to license, it will pay additional fees, milestones, and royalties. Metabasis' HepDirect technology helps ensure that high concentrations of biologically active forms of specific drugs are in the liver, without increasing the risk of exposing other tissues to the administered drug.

ML Laboratories PLC

Innovata Biomed Ltd.

Pliva DD

ML Laboratories' Innovata Biomed (dry-powder inhalers) and Pliva DD (specialty pharmaceuticals) will work together on the development of PLD-177 to treat asthma. The therapeutic will be delivered via IB's Clickhaler. (Dec.)

IB will get up-front fees and milestones during the development period, plus royalties on sales. It also gets a contract to supply Pliva with the necessary inhalers. PLD-177's method of action resembles that of corticosteroids, with selective affinity to lung tissue. The drug candidate has suppressed inflammation in preclinical models and is scheduled to begin Phase I trials in the first quarter of 2005. IB's Clickhaler is a multi-dose breath-actuated dry powder inhaler that has been used to deliver Otsuka's B2 agonist Meptin, Vectura's inhaled proteins and peptides, and Schein's asthma therapeutics.

MorphoSys AG

Pfizer Inc.

MorphoSys AG and Pfizer will work together over a five-year period on the development of antibody therapeutics. (Dec.)

Pfizer will provide an up-front cash payment, plus research funding and milestones (valued at more than $50mm). It will also get royalties for each antibody developed under the agreement. MorphoSys will use its Human Combinatorial Antibody Library (HuCAL) Gold to generate and optimize fully human antibodies against several Pfizer targets. Pfizer will be in charge of all preclinical and clinical development as well as marketing of any resulting products.

Onyx Pharmaceuticals Inc.

Sangamo BioSciences Inc.

Sangamo BioSciences (transcription factors for gene modulation) has licensed rights to Onyx Pharmaceuticals' Armed Therapeutic Virus (ATV) cancer-killing technology, which engineers adenoviral vectors to express a therapeutic gene. Sangamo will develop an ATV that codes for a zinc finger DNA binding protein transcription factor, or ZFP TF. (Dec.)

Sangamo gets exclusive worldwide rights and will be responsible for all research and commercial development of the combined platforms to create ZFP TF ATVs. Onyx will receive milestones as candidates move to the clinic, and it will be entitled to sales royalties. Its ATV vectors selectively replicate in cancer cells only, causing them to lyse, or burst open. As a first application, Sangamo will engineer Onyx's ATV to express ZFP transcription factors intended to promote production of GM-CSF, an immune activator known to augment the body's tumor-fighting response. This ATV would be injected into a solid tumor, where the delivered transcription factor would cause production and secretion of GM-CSF from cancer cells, evoking a tumor-specific immune response.

Pfizer Inc.

XenoPort Inc.

In a multi-year agreement, XenoPort (develops technologies to improve drug delivery) and Pfizer seek to develop technologies that can assist in delivering central nervous system drugs across the blood-brain barrier. (Jan.)

XenoPort will use its Engineered Drug Transport technology to discover key CNS absorption and efflux transporters with the intention of eventually designing drugs with improved the oral absorption, distribution and pharmacokinetic properties. To the collaboration, Pfizer will contribute research funding as well as its expertise in CNS drug discovery. Both companies will share the use of any technologies that result from the deal. XenoPort has applied its technology to improve the bioavailability of off-patent drugs and create new prodrugs with better medicinal properties.

Procter & Gamble Co.

Procter & Gamble Pharmaceuticals Inc.

Sequenom Inc.

Procter & Gamble Pharmaceuticals licensed exclusive rights to genetics company Sequenom Inc.'s proprietary osteoporosis targets. (Dec.)

P&G intends to use its expertise in bone biology and clinical development to validate the licensed targets and test them in cells and animal models to identify candidates for drug development. Sequenom could receive milestones of up to $30mm based on P&G's clinical success and launch of new therapeutics. It may also get sales royalties on any resulting products. Under the agreement, Sequenom keeps all diagnostic rights to the targets. It has produced osteoporosis targets using its technology that can test large numbers of people with genetic differences to see how likely the differences are to cause disease or adverse reactions to drugs. P&G's leading osteoporosis drug Actonel, which it co-markets worldwide with Aventis, reported 2003 sales of more than $700mm; the osteoporosis market is worth an estimated $4bn.

Protein Design Labs Inc.

Xencor Inc.

Protein Design Labs (develops humanized antibody therapeutics) received a license to apply protein drug company Xencor's XmAb technology to some of its own antibodies in preclinical development, seeking to create monoclonal antibodies with optimized properties. (Jan.)

Under the multi-year deal, PDL pays Xencor technology access and license fees, development-based milestones, and sales royalties on resulting products. PDL will handle all development and commercialization activities. Xencor's XmAb is comprised of engineered Fc regions that, when applied to antibodies, can mediate effector functions of the immune system. The technology can enhance antibody-mediated destruction of tumor cells, improve their structural stability, and reduce immunogenicity. Xencor believes XmAb-based antibodies have potential applications in disease areas including oncology, inflammation, transplantation, and infectious diseases. PDL says it will apply the technology to its cancer-tissue selective targets in an effort to create new therapeutics.

Provid Pharmaceuticals Inc.

Suntory Pharmaceutical Research Laboratories LLC

Suntory Pharmaceutical Research Laboratories (small-molecule drugs for cardiovascular and immunological diseases) will help Provid Pharmaceuticals (small-molecule drug discovery) develop its drug candidates to treat multiple sclerosis. (Jan.)

SPRL will handle activities related to in vivo pharmacology and development, contributing its expertise in structure-based drug design. Provid will provide support in the area of chemistry. SPRL receives up-front payments, R&D funding, development-based milestones, and sales royalties on resulting drugs. The Provid compounds being developed are small-molecule peptide mimetic inhibitors of antigens that bind to major histocompatibility complex (MHC) class II DR2 molecules, which are receptors associated with MS. Compounds that block antigen presentation are thought to shut down the autoimmune disease process, thus preventing new lesions.

Financings

Arena Pharmaceuticals Inc.

Arena Pharmaceuticals (develops drugs that act on G protein-coupled receptors (GPCRs)) closed a $35mm private placement through the sale of Series B-1 convertible preferred shares to two institutional investors. The stock converts into common shares at $7.50 each. Investors also received seven-year warrants to buy up to approximately 1.5mm common shares exercisable at $10 each. (Dec.)

The investors were also issued warrant units allowing them to purchase up to $11.5mm in Series B-2 convertible preferred stock within a 16 month period, as well as more seven-year warrants to buy 450k common shares exercisable at $10 apiece. Additionally, investors agreed to vote in line with Arena's board for as long as they own Series B shares. This month Arena reported positive preclinical results of its obesity candidate, APD356, which is a highly selective 5HT2C agonist that has demonstrated its ability to reduce body weight and food intake in animal models. It has also been shown to increase HDL (good cholesterol) levels. The company anticipates Phase I trials to begin in early 2004. Investment Banks/Advisors: Reedland Capital Partners

Axonyx Inc.

Axonyx (develops diagnostics and therapeutics for CNS disorders) brought in $49.7mm through a private placement of about 9.65mm common shares priced at $5.15 each (a 6% premium based on the market average) to new and existing institutional investors. (Jan.)

The investors also received five-year warrants to buy another 2.41mm common shares exercisable at $7.25 each. Axonyx is developing compounds for diseases including Alzheimer's, human memory disorders, and prion-based illnesses such as mad cow disease. Its lead compound, phenserine, is currently in Phase IIb and Phase III clinical trials for Alzheimer's disease. The drug candidate is a potent and selective inhibitor of acetylcholinesterase and beta amyloid precursor protein. Studies have shown it to be well tolerated and effective in improving the memory of mild-to-moderate AD patients. Four months ago, the company raised $24.3mm in a private financing. Investment Banks/Advisors: Punk, Ziegel & Co.; Rodman & Renshaw Inc.

BioMS Medical Corp.

Canadian biopharmaceutical company BioMS Medical (multiple sclerosis therapies) is looking to net $15.26mm ($Cdn11.48mm) with a best efforts offering of units, each of which consists of one Class A common share and one-half of one common share purchase warrant. Whole share warrants entitle the holder to buy another common share for a one-year period at a $1 premium over the unit offering price. (Dec.)

BioMS is a spin-off of the University of Alberta, set up specifically to sell MBP8298, an intravenously delivered synthetic myelin basic protein to treat multiple sclerosis. The company licensed exclusive worldwide rights to the peptide, which is composed of 17 amino acids, from the university's Multiple Sclerosis Patient Care and Research Clinic where it was co-invented by university scientists Kenneth G. Warren, MD and Ingrid Catz. BioMS plans to use the money to move MBP8298 into Phase III clinical trials for secondary progressive MS.

Boston Life Sciences Inc.

Boston Life Sciences (cancer, autoimmune, CNS therapeutics, and diagnostic imaging) raised $8mm with a private placement of Series E cumulative convertible preferred stock and four-year warrants to a small group of institutional and private investors. The shares convert to common initially at $1.25; the warrants are for an additional 3.5mm common shares exercisable at prices that range between $1.49 and $1.55 each. (Dec.)

Burnham Hill Partners served as placement agent for the financing. The company expects to use some of the money to support a second Phase III trial of Altropane as a diagnostic for Parkinsonian syndromes. Altropane binds with extremely high affinity and specificity to the dopamine transporter (DAT), a capacity that is significant because the number of DATs regulates the dopamine levels needed for normal neurological function. BLS is also testing Altropane in Phase II trials for ADHD. It also plans to begin Phase I trials for inosine, a nerve growth factor nearing preclinical completion for stroke. Inosine promotes the outgrowth in central nervous system cells of axons, which form the connections between the nerve cells. The company will file NDAs for both candidates.

Cel-Sci Corp.

Cel-Sci (immune system-based therapeutics) grossed $2.55mm through the private placement of 3mm common shares priced at $0.85 each (a 30% discount to the market average). Investors included Cher Ami Holding, Longview Equity funds (managed by Redwood Grove Capital Management), Enable Growth Partners, and Capital Ventures International. (Dec.)

Participants also received three-year warrants to purchase an additional 900k common shares at $1.32 per share. Cel-Sci is developing drugs to boost the immune system in patients with various cancers and infectious diseases. Its Multikine immunotherapeutic is a mixture of naturally occurring cytokines that has induced tumor reduction in Phase II head and neck cancer trials. The company's lead candidate--CEL-1000--is based on its LEAPS (Ligand Epitope Antigen Presentation System) technology that links a T-cell binding peptide ligand with a certain disease associated peptide antigen to provide protection against conditions such as malaria, herpes, and cancer. Cel-Sci has received grants from the National Institutes of Health and other government agencies to develop CEL-1000 as a treatment and prophylactic for infectious diseases including vaccinia, smallpox, viral encephalitis, and herpes. Investment Banks/Advisors: Reedland Capital Partners

Cortex Pharmaceuticals Inc.

Cortex Pharmaceuticals (drugs for psychiatric and neurological diseases) raised $19mm through the private placement of stock to new and existing institutional investors. The company sold 6.9mm shares at $2.75 per share (a slight discount to the market average), and also issued five-year warrants to purchase an additional 4.49mm shares at an exercise price of $3.25. (Jan.)

Cortex will use the proceeds to speed development on its Ampakine compounds--drugs that act on chemical pathways in the brain to enhance memory and cognition. The company is in partnership with Servier SA to develop treatments for Alzheimer's disease, mild cognitive impairment, sexual dysfunction, anxiety disorders, and dementia; it is also working with NV Organon on Ampakine compounds to treat schizophrenia and depression. Cortex hopes to expand the reach of its discovery pipeline to include treatments for narcolepsy and fragile X syndrome in the future. Investment Banks/Advisors: Rodman & Renshaw Inc.

Dyax Corp.

Dyax Corp. raised net proceeds of nearly $45mm via a follow-on offering of 6mm common shares at $7.93; the total includes the underwriter's overallotment purchase. (Dec.)

Dyax holds key patents in phage display. It licenses out the technology--which is used for discovering antibodies and other proteins that bind tightly to a chosen target--and also has several in-house development projects stemming from its discovery candidates. Its recombinant small protein DX-88 recently reported good results from a Phase I/II clinical trial for controlling blood loss during CABG surgery. Dyax is co-developing the same compound with Genzyme for hereditary angioedema under a 1998 agreement but maintains rights to DX-88 for all surgical applications. Its other clinical candidate, DX890 is partnered with Debiopharm and is in Phase II for cystic fibrosis. Investment Banks/Advisors: Pacific Growth Equities

Genaera Corp.

Genaera Corp. (genomics and natural products company developing medicines for serious diseases) closed a $20mm private placement. The company sold 4.95mm common shares to four institutional investors at a price of $4.04 per share (a 7% discount to the market average); buyers also received warrants to purchase an additional 990k shares at an exercise price of $5.38 each. (Jan.)

The company's lead candidate in clinical trials is the natural product squalamine, a synthetic version of aminosterols originally found in the tissues of dogfish sharks that has exhibited strong anti-angiogenic properties. The compound is currently in Phase I/II trials to treat age-related macular degeneration, and in Phase II studies to treat solid tumors including prostate cancer, ovarian cancer, and non-small cell lung cancer. Genaera's genomics-based programs focus on the treatment of respiratory diseases. It is developing an interleukin-9 antibody, in collaboration with MedImmune, to treat asthma, and also has candidates--called mucoregulators--in development to decrease abnormal mucin gene production in chronic respiratory diseases characterized by mucus overproduction.

Genome Therapeutics Corp.

In conjunction with its acquisition of anti-infective therapeutics developer [Genesoft Pharmaceuticals], [Genome Therapeutics] (discovery and development of pharmaceutical products for specialty markets) is looking to net $82.08mm with a follow-on public offering of 16.8mm common shares priced at $5.25 apiece. When it originally filed in December, the company was offering 11mm shares at $3.18 each. (Dec.)

The company will use the money to advance the clinical development and launch of Genesoft's lead product Factive and GT's product candidates, including its lead candidate ramoplanin. Factive (gemifloxacin mesylate) is an orally administered, broad-spectrum fluoroquinolone antibiotic approved in April 2003 by the FDA for the treatment of acute exacerbations of bacterial chronic bronchitis and community-acquired pneumonia. GT is developing ramoplanin for the prevention, treatment, and control of serious bloodstream infections. The candidate is currently in Phase III trials to prevent bloodstream infections caused by vancomycin-resistant enterococci, and in a Phase II trial to treat Clostridium difficile-associated diarrhea. Investment Banks/Advisors: JP Morgan Chase & Co.; Legg Mason Wood Walker

Immunomedics Inc.

Diagnostic imaging and drug development company Immunomedics (cancer and autoimmune diseases) raised $10mm with a private placement to undisclosed investors of two-year 3.25% convertible senior notes. The notes convert to common shares at the greater of $5.33 or 120% of the volume-weighted average price for the five business days after the trade date. (Jan.)

The company will use the money to continue the development of its cancer and autoimmune disease therapeutics. It just received FDA approval to begin a Phase I clinical trial of its humanized IMMU-107 antibody (also called PAM4) for pancreatic cancer. Its humanized CD20 antibody IMMU-106 is in early Phase I/II trials for non-Hodgkin's lymphoma and plans are in place to begin clinical trials in patients with certain autoimmune diseases. Immunomedics has other antibodies in early-stage clinical trials, including IMMU-100, in Phase I for colorectal and breast cancers; IMMU-101, in Phase I/II for colorectal and pancreatic cancers; and IMMU-105, in Phase I/II for liver cancer. Several others are in preclinical studies: IMMU-110 for multiple myeloma and renal cell carcinoma, IMMU-112 for prostate cancer, and IMMU-113 for myeloid leukemia.

Memory Pharmaceuticals Corp.

Memory Pharmaceuticals (CNS conditions and memory impairment) has filed for an initial public offering of its common shares. The company hopes to bring in up to $86.25mm with the financing. (Dec.)

Memory will use the proceeds to continue the R&D of its drug candidates. The company's MEM 1003 (a neuronal L-type calcium channel modulator) has completed Phase I studies for Alzheimer's disease; it is also studying the compound as a therapeutic for vascular dementia and mild cognitive impairment. Memory is collaborating with Roche on the development of two PDE4 inhibitors--Phase I MEM 1414 for Alzheimer's disease and preclinical MEM 1917 for depression--as well as preclinical MEM 3454 (a partial agonist of the nicotinic alpha-7 receptor) for schizophrenia. Investment Banks/Advisors: SG Cowen & Co.; Banc of America Securities LLC; Fortis Securities Inc.; UBS Investment Bank

NeoPharm Inc.

NeoPharm (cancer therapeutics) netted $73.5mm through the follow-on public offering of 4.3mm common shares, including the overallotment, priced at $18.25 each. (Jan.)

The company will use the proceeds to continue development on its five cancer product candidates currently in clinical trials. Its lead compound, IL13-PE38QQR, is based on NeoPharm's tumor-targeting toxin platform, and has completed Phase II trials for glioblastoma multiforme. Other candidates--which are based on the NeoLipid liposomal drug delivery system (which combines an active drug with lipids to satisfy a tumor cell's need to consume fat while at the same time delivering the toxin directly to the tumor)--include LE-SN38 for colorectal cancer; LEP-ETU for breast, lung, and ovarian cancer; and LErafAON and LEM for various other oncology indications. Investment Banks/Advisors: First Albany Corp.; UBS Securities LLC; JMP Securities LLC; Robert W. Baird & Co. Inc.

Northfield Laboratories Inc.

Northfield Laboratories (blood substitutes for transfusions) raised $15mm through the private placement of 2.58mm common shares at $5.80 per share (a 22% discount) to selected accredited investors. Investors also have the option of purchasing an additional 646k shares at the offering price within 90 days of closing. (Jan.)

Northfield markets a chemically modified hemoglobin product called PolyHeme that is an alternative to transfused blood in cases of acute blood loss. The company buys donated blood from the American Red Cross and applies its own separation, filtration, and modification processes to manufacture the product. Northfield claims that PolyHeme carries as much oxygen as transfused blood, is universally compatible (eliminating the need for timely blood typing prior to transfusion), and is free of blood-borne diseases such as HIV/AIDS and hepatitis. Investment Banks/Advisors: SG Cowen & Co.

NovaDel Pharma Inc.

Drug delivery company NovaDel Pharma netted $12.9mm through the private placement of stock to accredited investors. The company sold 13.3mm common shares at about $1.05 apiece (a 30% discount to the market average), and also issued warrants to purchase an additional 4mm shares at an exercise price of $1.40 each. (Jan.)

NovaDel plans to use some of the proceeds to fund human pilot pharmacokinetic studies on new versions of leading marketed drugs. The company has applied its lingual spray technology to reformulate four products: GlaxoSmithKline's anti-emetic Zofran, Pfizer's anti-anxiety drug Xanax, GSK's Imitrex migraine treatment, and Sanofi-Synthelabo's sleep-inducing drug Ambien. NovaDel's platform is designed to deliver drugs directly into the systemic blood circulation through the oral mucous membranes. The goal is to bypass the gastrointestinal tract and avoid metabolism by liver enzymes. The technology also allows for faster onset of action and an improved safety profile compared to tablet formulations. NovaDel is additionally conducting studies on a lingual spray formulation of nitroglycerin, and hopes to file its first NDA for the candidate later this year. Investment Banks/Advisors: Paramount Capital Inc.

OxiGene Inc.

OxiGene Inc. (vascular targeting agents, VTAs) raised net proceeds of $22.3mm in a placement of about 2.76mm common shares at $8.78 (market price) to institutional investors. (Jan.)

Vascular targeting agents selectively destroy new blood vessels to cut off support to cancer cells while leaving normal vasculature unharmed. OxiGene will use the new money to continue development of its lead VTA compound, combretastatin A4 prodrug (CA4P), which has been tested in Phase II trials against thyroid, head and neck, lung, prostate, and colorectal cancers. The company is pursuing development in other cancers as well as for retinal degeneration indications in ophthalmics. Deeper in its pipeline are three preclinical candidates. Investment Banks/Advisors: Roth Capital Partners; Lehman Brothers Inc.; Lazard LLC; Rodman & Renshaw Inc.

ProMetic Life Sciences Inc.

ProMetic Life Sciences (drug purification technologies) grossed $17.3mm ($Cdn13mm) (including the overallotment) through a follow-on public offering of 12.1mm subordinate voting shares priced at $1.43 each, representing a slight discount to market. (Dec.)

The company plans to use the proceeds to improve manufacturing capabilities, fund continued R&D of drug candidates, speed up commercialization of a plasma protein purification technology that it developed in collaboration with the American Red Cross (ARC), and for the development of a second product via Pathogen Removal and Diagnostic Technologies Inc. (PRDT), a joint venture between ProMetic and ARC. In November, PRDT introduced its first product that can selectively reduce the infectivity of the transmissible spongiform encephalopathy agents responsible for transmitting Creutzfeldt-Jakob disease and its variant forms. A few weeks prior to this financing, ProMetic licensed Hemasol exclusive North American rights to its plasma protein purification technology. Investment Banks/Advisors: Dundee Securities Corp.; Sprott Securities Ltd.; Canaccord Capital Corp.; Loewen, Ondaatje, McCutcheon Ltd.

Santarus Inc.

Specialty drug company Santarus (gastrointestinal disease therapeutics) hopes to raise up to $85mm in an IPO. (Dec.)

The company will use the proceeds to fund its Rapinex (omeprazole) candidates, which it is developing as next-generation proton pump inhibitors (PPIs) to target GI disorders such as peptic ulcers, heartburn, GERD, erosive esophagitis, and upper GI bleeding. PPIs are designed to block the enzyme system that produces stomach acid. Santarus is designing Rapinex formulations that use an antacid to protect the drug from degrading as opposed to current PPIs, which can only be taken in a delayed-release coated form that could delay onset of action. Santarus submitted an NDA in August 2003 for its powder-for-suspension version of Rapinex, an immediate-release omeprazole. It is also developing Rapinex capsules and Rapinex chewable tablets, which are solid formulations. Investment Banks/Advisors: RBC Capital Markets; UBS Securities LLC; Thomas Weisel Partners LLC; SG Cowen & Co.

Tranzyme Inc.

In connection with its recent acquisition of Neokimia, Tranzyme has received $6mm through the private placement of convertible notes. Pacific Rim Ventures, Business Development Bank of Canada (BDC) Venture Capital, Desjardins Venture Capital, Medtech Partners, Research Triangle Ventures, Southeastern Commercialization of University Technologies (SCOUT) Healthcare Fund (managed by Greer Capital), and Redmont Venture Partners participated. (Dec.)

Tranzyme will use the funds to optimize and begin preclinical development of its therapeutics to treat gastrointestinal disorders and metabolic diseases. The company created its drug candidates using its TranzVector gene transfer technology, TExT protein expression technology, and TranzAssay assay development and drug discovery technology. Tranzyme says the proceeds from the financing will carry the company into 2006, but it will still look for an additional $6-8mm in 2004 to bring candidates into Phase II studies. Investment Banks/Advisors: Vengate Capital Partners

Valeant Pharmaceuticals International

Research-based specialty drug company Valeant Pharmaceuticals International (formerly ICN Pharmaceuticals) is selling $300mm in 7% senior notes due 2011. (Dec.)

Valeant may choose to redeem any or all of the notes after mid-December 2007. The company said it plans to use the proceeds to retire all of its outstanding 6.5% convertible subordinated notes. In November, it offered $400mm worth of convertible subordinated notes to qualified institutional buyers. Valeant has developed products in the areas of infectious disease, neurology, and dermatology. Its pipeline includes Virazole for respiratory syncytial virus, Ancotil/Ancobon to treat fungal infections, Mestinon for myasthenia gravis, Oxsoralen-Ultra for severe psoriasis, Efudex/Efudix for actinic keratoses, Kinerase to reduce the appearance of wrinkles, and a scar treatment called Dermatix.

Valentis Inc.

Valentis Inc. (develops products for cardiovascular disease) raised $6.47mm with the private placement of 3.15mm common shares priced at $2.05 each (a 15% discount based on the market average) to several new investors along with returning participants, including Perseus-Soros Biopharmaceutical Fund. (Dec.)

Investors were also issued five-year warrants to purchase another 1.26mm shares of common stock exercisable at $3.00 each. Valentis plans to use the proceeds to finish a Phase II clinical trial of its lead candidate Deltavasc for treating peripheral arterial disease. Deltavasc uses a polymer (non-viral) system to deliver the angiogenic Del-1 gene to oxygen-starved tissue in the legs and promote the growth of new blood vessels. The company hopes to conclude the Phase II trial in the third quarter of 2004.

Viragen Inc.

Viragen (protein-based drugs for malignant and viral diseases) raised net proceeds of $4.2mm through the private placement of 22.75mm shares of common stock priced at $0.20 per share (a 20% discount to market) to new and existing institutional investors. (Dec.)

The company also issued investors three-year warrants to buy an additional 6.83mm common shares at $0.26 each. Viragen says it will use the funding for commercialization of its lead product, Multiferon, as well as to continue R&D efforts on its technology portfolio. Multiferon, a natural human alpha interferon, has demonstrated its effectiveness to treat many viral and malignant indications including hepatitis C, malignant melanoma, and other cancers. Under deals signed in 2003, the drug is currently sold by Pentafarma SA in Chile and by Arriani Pharmaceuticals SA in Greece and certain other Balkan countries. Viragen's portfolio also contains its Avian Transgenic Technology, which is used to manufacture human therapeutic proteins, including monoclonal antibodies for cancer.

Research/Analytical

Acquisitions

Thermo Electron Corp.

Jouan SA

Thermo Electron has acquired Jouan SA (provides research equipment to prepare, process, and preserve biological samples) for €110.9mm ($137mm) in cash and has assumed €7.1mm in debt. (Jan.)

Thermo Electron acquired the shares from Marcel Victorri (who created and now manages Jouan), Paribas Sante, Natexis Investissement, IPO, Ouest Croissance, and other minority shareholders. Jouan manufactures and provides academic institutions and pharmaceutical and biotech companies with media preparation systems, Innovens incubators and ovens, centrifuges, freezers, and sample preparation instruments. Jouan says that between 1990 and 2002, its sales profits have had an annual growth rate of 12.5%, ranking it the third company worldwide in manufacturing sample preparation equipment. Investment Banks/Advisors: Hawkpoint Partners (Jouan SA)

Joint Arrangements

Ambion Inc.

Applera Corp.

Applied Biosystems Group

Ambion (develops diagnostics based on RNA) will combine its short-interfering RNA (siRNA) products with Applera's Applied Biosystems' real-time PCR reagents to develop and co-market products that can perform and monitor RNAi-based mammalian gene knock-down. (Jan.)

Ambion will utilize Applied Biosystems' TaqMan Assays-on-Demand gene expression technologies to validate its own siRNA products by verifying that the siRNAs have resulted in the desired level of knock-down. Ambion contributes to the deal its expertise in siRNA, while Applied Biosystems adds its experience in quantitative, real-time PCR. Ambion's products have applications in the areas of molecular and cell biology, microbiology, drug discovery, genomics, and molecular diagnostics. The companies hope to develop products that offer researchers the ability to determine gene function more efficiently and provide them with the ability to easily knock down specific target gene expression.

Bayer AG

Bayer HealthCare AG

genOway SA

In a nonexclusive agreement, functional genomics company genOway SA will use its transgenesis technology platform to develop genetically modified mouse models using gene targets provided by Bayer HealthCare AG. (Dec.)

Bayer will use the models for its gene function analysis and compound testing. GenOway's technologies and expertise are in the area of transgenesis, which involves the use of knock-out, knock-in, conditional, and inducible model systems for drug discovery. Using mouse and rat models, the company says its technologies enhance predictability and shorten model development time, two main issues in biopharmaceutical R&D.

Supplies, Equipment & Devices

Acquisitions

Abbott Laboratories Inc.

MediSense Inc.

TheraSense Inc.

Abbott Laboratories is acquiring all the outstanding stock of blood glucose monitoring device company TheraSense for $27 per share (a 34% premium to the market average), valuing the deal at about $1.12bn. (Jan.)

TheraSense develops, manufactures, and markets the FreeStyle line of blood glucose monitoring systems that enables diabetics to take a blood sample about the size of a pinhead from multiple sites on the body, providing rapid test results and eliminating pain. Its FreeStyle Flash--the smallest blood glucose meter available on the market--and FreeStyle Tracker diabetes management system incorporate a test strip technology that provides accurate results because it uses coulometry that measures virtually all the glucose in a sample, unlike most systems which use amperometric technology that measures only a fraction of the glucose in a sample. The FreeStyle Navigator offers real-time glucose data, hypo- and hyper-glycemic alarms, and trend analysis, and utilizes the company's patented Wired Enzyme technology. Abbott will offer TheraSense products through its MediSense biosensor division, which markets the Precision line of monitoring systems for diabetes patients. According to the World Health Organization, the market for blood glucose monitoring may have reached $5bn in sales last year and could grow 10% annually.

Danaher Corp.

Radiometer AS

The industrial firm Danaher Corp. (process and environmental controls; tools and components) will acquire Radiometer AS of Copenhagen (blood gas analyzers) through a cash tender offer of about $730mm (DKK4.4bn). (Dec.)

Radiometer's board advises stockholders to accept the $76.31/share bid, which is about a 6% premium to the market price the day before the offer was announced. Investeringsselskabet, the investment group that controls 70% of the company's voting rights (and about 34% of its total equity) also approves the transaction. Radiometer was looking for a buyer because its CEO announced he intended to retire in 2004 and wanted to divest his holdings in the company. Radiometer's annual revenues are about $300mm, mostly from consumables and services related to its gas monitors; some of its analyzers measure gases from a blood sample, and others are transcutaneous monitors that take readings via skin sensors. Danaher says the deal will grow its European presence and help it move into medical technology, which it views as complementary to its existing businesses. Danaher is also currently arranging to buy Dentsply International's dental imaging division, Gendex.

DiagnoCure Inc.

Molecular Diagnostics Inc.

Samba Technologies

DiagnoCure (immunoassay and molecular tests for early cancer detection) says it is acquiring the assets of Samba Technologies of Grenoble, France in order to obtain its IP in digital imaging and information technology and its customer lists. (Dec.)

But Molecular Diagnostics Inc., Samba's existing parent, calls the announced acquisition fraudulent and in violation of agreements between it and DiagnoCure. Samba had been partnering on the automation of DiagnoCure's ImmunoCyt/uCyt+ bladder cancer test. Since one year ago, Samba has been in receivership, carrying on operations while preparing a reorganization plan; MDI claims communications between Samba's management and the French court were faulty, and it is seeking legal remedies against DiagnoCure and intends to block the acquisition. For DiagnoCure, the addition would serve its growth strategy, opening the door to numerous new applications for its immunoassays. Any clinical lab that wants to perform large-volume testing must offer automated immunopathology assays, and digital imaging is a necessary component of automation. With the Samba technology in hand, DiagnoCure expected to have an automated version ready in the first half of 2004. Samba products currently run in many cancer centers and path labs in North America and Europe.

Guidant Corp.

AFx Inc.

Guidant Corp. has agreed to acquire AFx Inc. (microwave surgical cardiac ablation) for $45mm in cash up front plus potential earnouts. (Jan.)

AFx's team of 40 employees have developed a microwave generator technology that has been used in more than 5,000 cardiac tissue ablation procedures. The system delivers microwave energy to the surfaces of the heart via sterile, single-use, hand-held surgical probes called Flex 2, Flex 4, and Flex 10. AFx is currently seeking FDA clearance of the probes for a specific indication in atrial fibrillation. The company hopes to develop a minimally invasive surgical procedure that will become the standard of care for symptomatic atrial fibrillation patients in the future. Guidant expects that the addition of AFx's technology will allow it to develop a line of implantable defibrillators and stents.

iCAD Inc.

Qualia Computing Inc.

CADx Systems Inc.

Computer-aided detection (CAD) company iCAD (breast cancer CAD software and radiographic film digitizers) has acquired another CAD company CADx Systems (formerly CADx Medical Systems) and its parent Qualia Computing for $31.85mm in exchange for 26.9mm outstanding CADx and Qualia shares. (Dec.)

ICAD's offer consisted of $1.55mm in cash up front, a 36-month secured promissory note in the amount of $4.5mm, and $25.8mm of its own stock (4.3mm shares which had a market average of $6 at the time the deal was signed). An industry observer reported that CADx's and Qualia's CEO Dr. Steven Rogers says the merger will create the strongest independent company operating in CAD, a technology that is used to help early detection of breast cancer in conjunction with full field digital mammography, as well as in the detection of lung and colon cancers (it also has potential cardiovascular disease applications). ICAD says the companies' activities are complementary with little overlap (the combined entity will have placed more than 300 breast cancer CAD systems) and it expects CADx to be profitable in the fourth quarter of 2003 and in 2004. CADx brings distribution channels in the US (through SourceOne Healthcare Technologies, the largest distributor of imaging equipment, supplies, and accessories in that territory) and in Europe. The primary goal of the merger is to gain a greater share of the early-stage breast cancer detection market over the next two years. CADx will become an independent subsidiary of iCAD, and James Corbett, CADx's current EVP will become president and CEO of the CADx subsidiary and COO of iCAD; Dr. Rogers will become CSO of the enlarged company and sit on its board.

Intermagnetics General Corp.

Invivo Corp.

Intermagnetics General Corp. (MRI instruments and superconducting materials) has acquired Invivo Corp. (vital signs monitoring systems), paying $22 in cash (a 4% premium) for each of the company's outstanding shares. The acquisition has a fully diluted value of about $152mm, or 2.19 times sales for the 12 months ending September 2003. (Jan.)

IGC originally tried to buy the firm in early November for $19 a share (consisting of $15 in cash and $4 in IGC common stock), but the company rejected its offer. Invivo says that with its US direct sales force of 38 salespeople and international distributor network operating through wholly owned subsidiaries Invivo Research and Medical Data Electronics (which it just acquired in April 2003 from the Viasys division SensorMedics), it has become a leading worldwide provider of vital sign patient monitoring products, used particularly during magnetic resonance imaging procedures. Invivo has been specializing in the R&D, manufacture, and distribution of medical products to hospitals, where it focuses on radiology and the operating and emergency rooms. The company's other products include the M-12 line for critical care, anesthesia, and neonatal vital signs monitoring, the Angel telemetry transmitter, and the Escort Vision central station. Intermagnetics intends to combine the Invivo systems with its own MRI and instrumentation core businesses.

OSI Systems Inc.

General Electric Co.

GE Medical Systems

Instrumentarium Corp.

Spacelabs Medical Inc.

OSI Systems (security systems, optoelectronic components, and medical monitoring) has agreed to purchase Instrumentarium Corp.'s Spacelabs Medical (patient monitors) for about $57mm cash. General Electric Medical acquired Instrumentarium last fall and has been required by regulators to divest the Spacelabs business worldwide. (Jan.)

Spacelabs had unofficial 2003 revenues of roughly $150mm. The Washington State firm was independent until it was bought by Instrumentarium (Finnish hospital supply company) in mid-2002. The acquisition price then was much higher: $141mm. Spacelabs' modern monitors include features like touch-screen controls and a modular structure that makes them flexible and easy to upgrade. They are designed for integration with enterprise-wide clinical information systems. The company has an installed based of about 100k monitoring units worldwide (70% of them in the US and Europe) and supplies the related disposable and replaceable supplies. As a wholly owned subsidiary of its new parent, Spacelabs will operate independently (as do other OSI divisions) and will be run by its existing president and other key officials. The deal includes the rights for OSI to market certain GE products.

Viking Systems Inc.

Vista Medical Technologies Inc.

Viking Systems is acquiring the assets of Vista Medical Technologies' medical device and visualization technology business in exchange for stock. Vista Medical also receives royalties and other cash payments of up to $5.5mm, depending upon the performance of the acquired business over a five-year period. (Dec.)

Vista Medical gets 3.054mm Viking common shares (about 10% of its fully diluted equity), representing approximately $2.3mm based on the market average. The transaction will allow Vista Medical to grow its other businesses--obesity surgical and medical management--and become a niche health care company that focuses on providing products and services for managing severe obesity. As part of the acquisition, the companies also negotiated a potential marketing and technology agreement relating to Vista Medical's obesity surgery operations. Viking's new medical technology business will develop, manufacture, and market products that offer surgeons and interventional physicians who perform minimally invasive procedures an effective and ergonomic way to visualize anatomical structures. Its endosite advanced visualization and information system will provide general surgeons real-time access to critical information through the use of high-resolution 3-D video cameras. Vista Medical's CEO John Lyons will take a seat on Viking's board.

Joint Arrangements

Anika Therapeutics Inc.

Johnson & Johnson

Ortho Biotech Products LP

Anika Therapeutics (hyaluronic acid--HA--products for protecting or repairing bone, cartilage, and soft tissue) signed a long-term agreement to supply its Orthovisc material to J&J's Ortho Biotech division. (Dec.)

Orthovisc is a highly purified, high molecular-weight form of HA for treating pain and stiffness caused by osteoarthritis of the knee and for improving joint mobility. Anika gets $2mm up front plus milestones; one payment will be triggered by receipt of FDA approval, which is expected as soon the company's manufacturing facility has successfully undergone inspection. Ortho's rights cover the US and Mexico; Orthovisc has been marketed in other territories since 1996. Beyond the supply agreement, Ortho Biotech will pay for post-marketing clinical trials of Orthovisc and for R&D of future products based on the Anika viscosupplementation technology.

Clearant Inc.

CryoLife Inc.

Tissue processing company CryoLife has licensed a pathogen inactivation technology from Clearant for use with human tissue allografts. (Dec.)

The Clearant Process is based on the use of gamma irradiation to inactivate microorganisms, destroying the DNA and RNA of all known pathogens while preserving surrounding healthy cells. CryoLife initially intends to further develop the technology and use it to sterilize human orthopedic tissue that will be utilized in the repair of sports-related injuries. The company is attempting to restore consumer confidence in its allograft products following an FDA-mandated recall in 2002 of certain tissue products after the agency discovered disease screening inadequacies in one of CryoLife's production facilities. The company now claims that it is continuing to improve on tissue screening processes and reports an infection rate of less than 1%. It will begin using Clearant's technology by the end of the year, and may even replace its own antimicrobial solution with the Clearant Process.

GenVec Inc.

Johnson & Johnson

Cordis Corp.

GenVec (gene therapy) will partner with the cardiology division of J&J's Cordis Corp. to measure the clinical benefit of delivering GenVec's drug candidate BioBypass directly into heart tissue using Cordis's Nogastar mapping catheter and Myostar injection catheter. (Jan.)

The compound produces vascular endothelial growth factor (VEGF)-121, an angiogenic protein that encourages formation of new blood vessels in ischemic tissue. The companies will share the cost of conducting a randomized, double-blind, placebo-controlled late-stage study in Europe and will collaborate on regulatory issues. The deal does not yet involve a marketing license: the partners retain rights to their own products; Cordis will conduct training for the interventional cardiologists taking part in the trial. BioBypass already received positive results from a Phase II study in patients with coronary artery disease who were not candidates for revascularization surgical procedures like CABG or angioplasty. GenVec says it will be an important commercial opportunity if administration of its angiogenic agent via Cordis's minimally invasive catheter system proves successful. It has developed BioBypass using gene therapy technology it licensed from Scios in 1996; Scios was acquired by J&J a year ago.

Financings

Cardima Inc.

Minimally invasive cardiac device company Cardima netted $2.9mm through a private placement to various accredited investors. The company sold 3.58mm shares at $0.87 apiece, representing a 15% discount to the market average. (Dec.)

Investors also received warrants to purchase just over 1mm additional shares at an exercise price of $0.96 each. Cardima's line of linear ablation microcatheter devices--the Revelation Tx, Revelation Helix, and Revelation T-Flex--have all received CE Mark approval in Europe to map and treat atrial fibrillation (AF). The company also obtained 510(k) clearance from the FDA early last year to market its surgical ablation system that treats AF during cardiac surgery with radio frequency energy.

CryoLife Inc.

CryoLife (human tissue preservation for surgical use) netted approximately $20mm through the closing of a private placement. The company sold 3.44mm common shares at $6.25 per share (a 20% discount to the market average). (Jan.)

The company has a low-temperature technology for preserving human tissues to be used in surgical implant procedures. Products include the tissue-engineered heart valve/vascular graft replacement line of SynerGraft products (awaiting 510(k) approval), as well as the BioGlue surgical adhesive, a combination of bovine serum albumin and glutaraldehyde used as an adjunct to sutures and staples in aortic dissections. Earlier this month, CryoLife licensed from Clearant a pathogen inactivation technology that the it will use to sterilize human allograft tissue for orthopedic surgeries. Investment Banks/Advisors: US Bancorp Piper Jaffray Inc.

EP MedSystems Inc.

EP MedSystems (cardiovascular devices) has brought in about $8.2mm with the private placement of 3.2mm common shares to selected institutional and other accredited investors. The shares were priced at $2.56 each, a 16% discount based on the market average. (Dec.)

The company will use the funds to retire debt and launch its products that have recently been approved. These devices include the Viewmate ultrasound systems to see inside the heart during diagnostic procedures, Viewflex catheter, Alert to treat atrial fibrillation, Alert CS/RA catheters used in diagnostic electrophysiology, and EP Workmate computerized lab with Real-time Position Management for mapping abnormal heart beats (it can record up to 192 intracardiac signals). Investment Banks/Advisors: C.E. Unterberg, Towbin

HealtheTech Inc.

HealtheTech (weight management devices) has raised $11.7mm with the private placement of 15.4mm common shares priced at $0.76 apiece, a 7% premium to the market average. Investors also received warrants to buy common shares at the same price. (Dec.)

The company will use the funds to expand its offerings into the weight management market, ultimately addressing worldwide obesity. HealtheTech's products include the handheld BodyGem system that measures the amount of calories an individual consumes as well as their resting metabolic rate, and BalanceLog software to personalize a weight-loss program and track nutrition and exercise.

Kinetic Concepts Inc.

Medical device company Kinetic Concepts (therapeutic specialty beds, surfaces, and related devices for wound care) has filed for its IPO, offering up to $400mm in newly issued common stock and secondary shares offered by selling shareholders. (Dec.)

Kinetic will use some of the money to pay down debt. Founded in 1976 by Jim Leininger, the once-public company became a private concern again in October 1997 through the sale of its stock to Fremont Partners and Richard C. Blum & Assoc. In a leveraged buyout, Leininger retained one-third ownership in the company. Kinetic has developed what it calls a "Continuum of Care" portfolio of products and services. These include systems that incorporate its Vacuum Assisted Closure or VAC technology, which helps promote healing in difficult-to-treat wounds. The company has more than 40 specialty beds, mattress replacement systems, overlays, and devices to help prevent and treat complications--such as skin breakdown, acute and chronic wounds, pneumonia, and circulatory problems--that result from immobility or obesity. Investment Banks/Advisors: Deutsche Bank AG; US Bancorp Piper Jaffray Inc.; Merrill Lynch Pierce Fenner & Smith Inc.; JP Morgan Chase & Co.; Goldman Sachs & Co.; SG Cowen & Co.; Citigroup Inc.; Credit Suisse First Boston

Mentor Corp.

Mentor (surgical devices and implants) has raised $125mm with the private placement of twenty-year 2.75% convertible subordinated notes to qualified institutional buyers under Rule 144A and to individuals in offshore transactions under Regulation S. (Dec.)

The notes will convert into common stock, initially at the rate of 34.14 shares per $1k in notes (about $29.29 per share). Mentor may redeem some or all of the notes at the beginning of January 2009 at 100.25% of the principal amount and after that (at either the beginning of 2014 or 2019), at 100% of the principal plus accrued interest. Mentor markets silicone gel-filled and saline-filled breast implants; tissue expanders for reconstructive and skin graft procedures; an ultrasound-assisted device to aspirate soft tissues during general and cosmetic surgeries; and liposuction equipment. Mentor's urological offerings include: Titan penile implants; endourological stents and catheters; Uratape, ObTape, and Suspend slings for use in pelvic floor reconstruction surgeries; Sabre and Axis dermal-based tissue for pelvic floor prolapse and incontinence; and brachytherapy seeds to treat prostate cancer.

Novacept Corp.

Women's health care company Novacept filed for its IPO, hoping to raise $86mm. (Jan.)

The company plans to use some of the proceeds for sales and marketing of its NovaSure endometrial ablation system that is currently on the market in the US, Canada, Europe, and Australia. The minimally invasive disposable surgical device delivers radiofrequency energy directly to the endometrial lining to treat menorrhagia (excessive menstrual bleeding) in premenopausal women. The company states that after one year, 91% of clinical study patients reported reduced bleeding; many also experienced a reduction in menstrual pain and PMS symptoms as a result of treatment with NovaSure. Investment Banks/Advisors: US Bancorp Piper Jaffray Inc.; JP Morgan Chase & Co.; Thomas Weisel Partners LLC