BioDelivery Sciences International (BDSI) has entered into a definitive agreement to acquire all of the capital stock of Arius Pharmaceuticals Inc, a Delaware corporation (Arius). The transaction is being structured as a reorganization of Arius with and into a newly formed, wholly-owned subsidiary of BDSI.
As part of the transaction, BDSI will issue to the former stockholders of Arius consideration comprised of an aggregate of 1,647,059 shares of a newly designated, non-voting and non-interest bearing, series of convertible preferred stock. The newly-created preferred stock will be convertible (upon the satisfaction of certain conditions) into shares of BDSI common stock on a one for one basis.
Subject to certain ongoing payment and funding obligations, Arius recently acquired an exclusive worldwide license to the Bema (buccal) delivery technology developed by Atrix Laboratories Inc. The Bema technology allows for the delivery of drugs across the buccal (i.e., mouth) mucosa that provides a rapid onset of therapeutic effect and a competitive advantage in such areas as pain relief and sedation. Arius is developing Bema fentanyl for treating cancer pain that is expected to enter phase III trials by mid-2005. In addition, plans have been undertaken to develop a second pain product for treating non-malignant pain and a rapid-acting Bema zolpidem, a reformulation of the leading oral hypnotic, Ambien, with the objective of reducing the onset of sleep to 10-15 minutes.
The value of the transaction was established was established based upon the $4.25 per share of BDSI's initial public offering. The preferred stock is eligible for conversion upon the earlier to occur of -FDA approval of Arius' first product or; five years from the closing date. The preferred stock enjoys certain other rights and privileges. The closing of the acquisition of Arius is subject to customary and certain other specific conditions set forth in the agreement and plan of merger and reorganization and is expected to occur by August 24, 2004.
BDSI Chairman, President and CEO, Dr. Francis E O'Donnell, Jr., stated, "the acquisition furthers BDSI as a specialty biopharmaceutical company developing selected patented drug delivery technologies with significant potential out-licenses, in addition to an exciting proprietary pipeline."
"The combined company will have licenses for two important, patented, delivery technologies, each of which have been out-licensed, and which are being used to develop proprietary products. BDSI's licensed Bioral technology, which we believe to be the most clinically-advanced nanotechnology for drug delivery, provides oral delivery of injectables, and enhances the efficacy and reduces the toxicity of certain oral drugs by favourably altering bio-distribution. We believe that Arius' licensed Bema technology is the most clinically-advanced transmucosal delivery technology. The combined company will have three possible drugs in clinical trials. Besides Bema Fentanyl, there is an autologous therapeutic vaccine (immunotherapeutic) for HIV. This therapeutic vaccine, which has been tested in 10 patients followed for several years, potentially could reduce dependence on expensive pharmaceutical cocktail therapies. Our third drug is furthest along- a transmucosal formulation of a well established anti-emetic for which a New Drug Application is expected to be filed in the first quarter of 2005. In addition to these three potential proprietary products, the combined company will have four out-licenses with royalties in the 12-24 per cent range, each relating to improved delivery of proven therapeutics with significant market opportunities," he concluded.
The operations of Arius will remain based in Research Triangle Park, North Carolina. Dr. Mark A Sirgo, a founder of Arius will join BDSI, becoming senior vice president of Commercialization and Corporate Development. Dr. Andrew Finn, also a founder of Arius, is becoming senior vice president of Product Development at BDSI. Drs. Sirgo and Finn have previously held senior positions at Glaxo-Wellcome.