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Mar 7, 2013

Toray Takes $5M Stake in Spectral Diagnostics

  • Toray Industries will invest $5 million in Spectral Diagnostics toward its Euphrates pivotal Phase III clinical trial, which the firms say is the world’s first to focus on a combination drug-diagnostic or “theranostic” product for sepsis, as well as for unspecified general corporate purposes.

    Headquartered in Toronto, privately held Spectral is seeking FDA approval for its lead theranostics product, Toraymyxin for septic shock. Toraymyxin is a therapeutic hemoperfusion device designed to remove endotoxin, a cause of sepsis, from the bloodstream. Spectral's Euphrates trial will assess Toraymyxin in combination with the company’s Endotoxin Activity Assay (EAA™), the only FDA-cleared diagnostic for the disease.

    As of Feb. 4, the Euphrates trial’s Data Safety and Monitoring Board concluded that there were no safety issues concerning the application of the Toraymyxin cartridge to patients, and that the trial’s clinical protocol appeared to be defining the correct target patient population for the study. Up until then, 191 patients met clinical entry criteria so far, of which about half had an elevated level of endotoxin.

    Spectral continued to add new sites to the Euphrates trial in Canada and the U.S., with plans for 45–50 sites enrolling patients by the end of June. “Spectral remains on track to achieve the trial’s next milestone, which will be a second planned interim analysis after 184 randomized patients have been followed for 28 days,” the company said in a statement.

    Through a private placement expected to close at the beginning of April, Spectral will sell 16,666,667 common shares to Toray at 30 cents per common share. Closing of the private placement is subject to approval from the Toronto Stock Exchange and customary closing conditions. Once completed, the deal will raise Toray’s stake in Spectral to about 12.8% of issued and outstanding common shares.

    “We will work with Toray to complete clinical research for U.S. FDA market approval of Toraymyxin, and we will seek to further expand acceptance of the EAA/Toraymyxin theranostic in jurisdictions outside of Japan,” Anthony Businskas, Spectral’s executive vp and CFO, said in a statement. "This strategic investment not only provides additional funds for our clinical trial, but also strengthens the existing collaborative relationship we have with Toray.”

    Spectral’s partnership with Toray stretches back to March 2009, when Spectral obtained exclusive U.S. development and commercial rights for Toraymyxin. Back then, Spectral said it would pursue FDA approval for Toraymyxin, then commercialize the product together with EAA. Spectral also holds exclusive distribution rights in Canada to the product licensed from Toray, a Japanese-owned manufacturer of pharmaceutical and medical products, among other things.

    According to its most recently available figures covering March–December 2012, Toray's net income slid about 31% to ¥37.3 billion (about $394 million) as net sales slipped 2% to about ¥1.2 trillion ($12.4 billion). During the 2011 fiscal year ending March 31, 2012, Toray saw net income rise 10.9% to ¥64.2 billion ($678 million) on net sales of ¥1.6 trillion (about $19 billion), up 3.2% from a year earlier.


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