Business Weekly - Cambridge, UK

Antisoma chief executive, Glyn Edwards

The deal removes Antisoma's reliance on its leading target, ASA404, and the firm says it now has the critical mass needed to create a major impact on the world scene, with a substantially more mature and diverse pipeline, taking its drug pipeline from four to seven, including two phase III and one in registration.

Antisoma will also firm up its balance sheet through a £20.9m fundraising that gives it starting cash of around £67m, which is expected to meet the company's next two years' requirements.

"This is a transforming deal," said chief executive at Antisoma, Glyn Edwards. "Combining Antisoma and Xanthus produces a company with the critical mass and mature pipeline needed to become a major player in oncology."

As well as adding three major assets to its pipeline - phase III oncology drug Xanafide and US rights to oral fludarabine, a niche oncology product in registration with the FDA - the company's staff headcount will grow from 70 to 110.

These new opportunities for out-licensing deals together with potential milestone receipts could extend its cash life beyond the results of the pivotal phase III lung cancer trial of its potential blockbuster ASA404.

Antisoma's directors said they believe Xanthus represents an excellent strategic fit for the firm providing it with a mature pipeline, critical mass, significant market opportunities, a new lower-risk niche opportunity, an out-licens ing opportunity and a strong balance sheet.

To acquire the entire issued share capital of Xanthus, Antisoma will issue Xanthus shareholders an aggregate of between 97.3m and 99.3m new ordinary shares in the share capital of Antisoma - depending on the closing date - representing approximately 22 per cent of the issued share capital of Antisoma.

The value of the gross assets attributable to Xanthus was £4.9m at December 31. The net loss attributable to the assets of Xanthus for the year to December 31 was £16.6m.

Antisoma's fundraising comprises a placing of 51.9m new ordinary shares to new and existing investors and a subscription of 28.5m new ordinary shares in Antisoma by existing investors in Xanthus at a price of 26p, representing a discount of 5.5 per cent to the closing middle-market price of an Antisoma ordinary share on the day before this announcement.

Antisoma intends to market Xanafide itself in the US, while seeking partners for potential commercialisation in Europe and Japan. The firm will review the design of the ongoing phase III pivotal study and its statistical power before providing guidance on the timing of potential applications for marketing authorisations.

It will also consider how best to realise the maximum value from oral fludarabine, which it believes could gain approval in 2009. Options include Antisoma commercialising the drug itself, formation of a partnership to sell the drug or wholesale divestment to a third party.

Antisoma also intends to continue preclinical work on the Flt3 inhibitor programme to produce optimised molecules for development, though development will be halted on two other Xanthus products in early-stage oncology trials, Clomet and Symadex.

ASA404 is being developed at the Hertfordshire BioPark facility in Welwyn Garden City, which Antisoma recently set up to focus on its pre and nonclinical operations.

The Xanthus deal is not expected to affect this new facility or the 20 staff working there.

Antisoma was founded in 1988 and listed on the London Stock Exchange in 1999. In the half year to December 31, Antisoma took revenues of £16.5m with a pre-tax profit of £4.1m, a £11.6m turnaround from its 2006 loss of £7.5m.

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