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Oct 22, 2010

Cephalon Invests $15M in ChemGenex and Buys BioAssets Development for $12.5M

  • Cephalon entered into a number of agreements today that strengthen its operations in leukemia and sciatica. In one of the deals, it signed a convertible note subscription agreement with ChemGenex Pharmaceuticals, an Australian-based oncology biopharmaceutical company. Under the terms of the agreement, it will provide up to A$15 million (about $14.73 million) to ChemGenex in return for a note that is convertible at A$0.50 per share. 

    This funding will support ChemGenex operations including clinical activities to complete an NDA for omacetaxine as a treatment for chronic myelogenous leukemia patients who have failed two or more tyrosine kinase inhibitors. 

    Separately, Cephalon entered into option agreements with two of ChemGenex' major shareholders, Stragen International and Merck Sante S.A.S.  Under those option agreements, it has the right to acquire up to 19.9% of ChemGenex' outstanding shares at A$0.70 per share.

    In addition, Cephalon exercised its option to acquire BioAssets Development (BDC) following receipt of interim data from a Phase II placebo-controlled study evaluating epidural administration of a tumor necrosis factor (TNF) inhibitor for the treatment of sciatica in 45 patients. Sciatica is a neuropathic inflammatory pain condition that occurs when the sciatic nerve is compressed, injured, or irritated. 

    Upon the closing of the merger, Cephalon would purchase all of the outstanding capital stock of BDC for $12.5 million, subject to net working capital and debt adjustments set forth in the merger agreement. BDC has already received $30 million for the Cephalon option to acquire BDC, and shareholders could receive additional payments related to regulatory and sales milestones. 

    Cephalon will gain rights to the BDC intellectual property estate covering the use of cytokine inhibitors including TNF inhibitors for sciatic pain in patients with intervertebral disk herniation as well as other spinal disorders. The transaction is expected to close in mid-November.

    “With this acquisition, Cephalon combines BDC's intellectual property and scientific expertise regarding TNF inhibitors with our own pipeline,” comments Lesley Russell, M.D., CMO for Cephalon. The firm plans on evaluating its own epidural administration of its domain antibody TNF inhibitor, CEP 37247, in a Phase II program. “The BDC data provides a path forward to evaluate a potential nonsurgical approach for the treatment of patients suffering from the debilitating effects of sciatica,” Dr. Russell adds.


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