Cell Therapeutics, Inc. (CTI) has entered into an agreement to acquire Systems Medicine, Inc. (SMi), a privately held oncology company, in a stock for stock merger valued at $20 million. SMi stockholders could also receive a maximum of $15 million in additional consideration, payable in either cash or shares of CTI common stock, upon the achievement of certain regulatory milestones.
Under the terms of the agreement, SMi will continue to operate as a wholly-owned subsidiary of CTI, utilizing its genomic-based platform to guide development of CTI's oncology products, including Brostallicin. Daniel D. Von Hoff, M.D., a founder of SMi, and currently Physician-in-Chief and Director of the Clinical Translational Research Division at the Translational Genomics Research Institute (TGen), as well as Chief Scientific Officer of US Oncology, is expected to head CTI's strategic product portfolio committee. Richard L. Love, a founder of SMi and former founder and CEO of ILEX Oncology, is expected to join CTI's Board of Directors.
The acquisition remains subject to conditions to closing outlined in the merger agreement, a company press release stated.
Key highlights of the acquisition include: Worldwide rights to Brostallicin, a DNA minor groove binding agent with proven anti-tumour activity and a favourable safety profile in more than 200 patients treated to date in clinical trials. Brostallicin is currently in phase II clinical studies.
Leverages SMi's strategic affiliation with TGen, utilizing their extensive genomic platform and high throughput capabilities to target a cancer drug's 'context-of-vulnerability' guiding clinical trials toward patient populations where the highest likelihood of success should be observed, thereby potentially lowering risk and shortening time to market.
Brings a team of renowned cancer drug development experts and industry veterans with proven track record to CTI.
Brostallicin fills CTI's clinical pipeline gap, with potential for market approval as early as 2010, following the potential launches of pixantrone and Xyotax (paclitaxel poliglumex, CT-2103) which are expected in early and late 2009, respectively.
Incremental operating expense from Brostallicin clinical development is expected to have minimal impact on burn rate.
"We expect Brostallicin and SMi will fit perfectly with CTI's effort to develop individualized cancer medicines where genomic targeting of specific populations of patients should increase the probability of clinical success and patient benefit, while at the same time offering us the potential to market an additional solid tumour indication product in the United States alongside our Xyotax programme with partner Novartis," commented James A. Bianco, M.D., president and CEO of CTI. "SMi brings a strong team of people with extensive experience in drug development, including founder and visionary, Dan Von Hoff, and president and CEO, Jeff Jacob. We are excited to have Jeff and his team leading the Systems Medicine subsidiary guiding the development path of our current preclinical drug candidates and also providing CTI access to other potentially exciting cancer drugs for our portfolio or for out-licensing opportunities."
"CTI is one of a few companies that, like SMi, recognize the benefit of the convergence of genomics in guiding clinical trials," noted Jeffrey E. Jacob, president and CEO of SMi. "Our team has been impressed with CTI's drug development skills and capabilities as well as their current product pipeline and strategy. We see this proposed business combination as a true win-win relationship not only for our respective companies, but also for patients by potentially expediting the development and potential commercial access to this important new class of cancer fighting agents. We believe this merger provides us and CTI with a unique critical mass in oncology drug development."
Brostallicin was discovered at Pharmacia and developed by Nerviano Medical Sciences (NMS) the largest pharmaceutical research and development facility in Italy and one of the largest oncology-focused, integrated discovery and development companies in Europe. Following a merger between Pfizer and Pharmacia, the rights to Brostallicin were assigned to NMS which continued its development and ultimately licensed worldwide rights to SMi.
Brostallicin is a synthetic second-generation DNA minor groove binder with potent cancer killing activity in experimental tumours models. The mechanism of DNA interaction is novel, since it binds covalently to DNA within the DNA minor groove. Prior to this discovery, most cancer drugs have targeted binding to the major groove in DNA leading to the successful introduction of several new classes of anticancer drugs, including topoisomerase inhibitors such as camptothecins and anthracyclines. By binding to the minor groove, Brostallicin targets a new means to interfere with DNA division and lead to tumour cell death. Brostallicin has demonstrated synergism in vitro in combination with standard cytotoxic agents as well as newer targeted therapies.
More than 200 patients have been treated with Brostallicin in single-agent and combination studies. Brostallicin had predictable and predominantly haematological toxicities. Activity was demonstrated in a number of solid tumour types. A phase II study of Brostallicin in relapsed/refractory soft tissue sarcoma met its pre-defined activity and safety hurdles and resulted in a first-line phase II study that is currently being conducted by the European Organization for Research and Treatment of Cancer (EORTC).
"Brostallicin belongs to an exciting new class of drugs called minor groove binders. Brostallicin has a potentially unique ability to become more active in tumours that are resistant to other cancer drugs. Moreover, its anti- tumour activity remains high in the presence of a number of critical cancer- causing genetic abnormalities that cause resistance to standard anti-cancer agents. This activity profile makes it of extreme interest in designing trials to test its activity in targeted patients with certain genetic abnormalities," said Jack W. Singer, M.D., chief medical officer at CTI. "The extensive preclinical profiling of this agent, coupled with the fact that the EORTC has advanced Brostallicin to a randomized phase II trial in first-line treatment of sarcoma as a result of a successful phase II effort in patients with prior therapy, underscores the potential of this product. And, the opportunity to get one of the most respected teams in cancer drug development involved in the development of our current drug pipeline will make this a very strong acquisition for CTI."
"Both CTI and SMi have strong ties to Italy, with all of our preclinical development being done in our Bresso facility and SMi's close relationship with NMS based in Milan," said Bianco. "Italy has a strong reputation as a leader in oncology drug development and we expect that this synergy will enable us to explore other scientific and development collaborations between our Bresso scientists and those at NMS. For example, we are discussing whether or not NMS could manufacture pixantrone for us in addition to manufacturing Brostallicin."
"NMS licensed Brostallicin to Systems Medicine because SMi has an outstanding reputation in drug development, combining pharmacogenomics and bioinformatics with experienced preclinical, clinical, and regulatory expertise," said Giampiero Duglio, managing director of NMS. "Finding and exploiting cancer's 'context of vulnerability' - SMi's expertise - should facilitate the development of Brostallicin. We also are very pleased that CTI and SMi intend to join forces - the combination of people, infrastructure and expertise increases our confidence in the Brostallicin development plan."