CytRx Corporation, a biopharmaceutical company engaged in the development and commercialization of therapeutics based on molecular chaperone amplification technology, announced the signing of a definitive agreement to purchase Innovive Pharmaceuticals, Inc., a publicly traded biopharmaceutical company with four clinical stage oncology drug candidates.
The combined company will have an attractive and expanded portfolio of clinical development programmes in oncology, Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig's disease), stroke recovery and diabetic foot ulcers. In addition, the combined company will own a 49 per cent interest in RXi Pharmaceuticals . Included in the acquired pipeline are North American and European licensing rights to tamibarotene, a drug currently being sold in Japan for the treatment of relapsed or refractory acute promyelocytic leukemia (APL). Tamibarotene is presently in a pivotal phase 2 clinical trial in APL, and CytRx anticipates that the acquisition will accelerate the time to its first potential NDA filing by several years to 2010.
"The Innovive acquisition is a compelling strategic fit for CytRx and is expected to provide several key benefits. Innovive has an attractive oncology portfolio with the opportunity for relatively near-term drug approval with low regulatory risk," said Steven A. Kriegsman, CytRx president and CEO. "This acquisition improves our potential for near-term revenue while maintaining our longer-term emphasis on our molecular chaperone technology platform. The addition of this pipeline leverages our significant expertise in oncology drug development. Moreover, the up-front price we are paying, and the structure of the success-based milestones, affords CytRx stockholders a significant opportunity for upside on our investment. We are confident that CytRx has the financial and operational flexibility to manage the appropriate integration of these assets into our existing portfolio. Following the completion of this transaction, we will undertake a comprehensive strategic review of all Innovive assets to determine where we can maximize stockholder value while managing financial risk."
Steven Kelly, Innovive president and CEO, stated, "Innovive's pipeline was designed to lower clinical and regulatory risk by targeting diseases with well-understood clinical endpoints providing a clear and established pathway to approval. Current market conditions, however, limited our ability to fund ongoing clinical development as intended, and we recognized the need to find a strong partner like CytRx to advance the four drug candidates. We are confident this acquisition by CytRx will serve the best interests of cancer patients."
"We look forward to integrating the Innovive portfolio into CytRx as we continue to build upon our molecular chaperone technology and pipeline," said Kriegsman. "We are proceeding with our phase 2 clinical trial of iroxanadine for diabetic foot ulcers, which is expected to begin in the first quarter of 2009, subject to FDA clearance. Furthermore, scientists at our San Diego laboratory have already identified possible next-generation chaperone-amplifying compounds to expand our pipeline. In the field of oncology, CytRx has been applying molecular chaperone technology to the identification of drug candidates by adapting its proprietary chaperone screening assay to identify inhibitors (rather than amplifiers) of chaperone activity. Because certain chaperones appear to be essential for cancer cells, CytRx's own internal molecular chaperone-inhibiting drug candidates may form the basis of future oncology products."
CytRx also announced its plan to conduct additional preclinical toxicology studies of arimoclomol, in development for ALS and stroke recovery, which are expected to take up to one year to complete. Based on recent telephone discussions with the FDA regarding its clinical hold on arimoclomol for ALS, CytRx anticipates that the planned phase 2b clinical trial of arimoclomol will remain on hold pending completion of this additional preclinical work. However, CytRx has not yet received a formal determination letter from the FDA with respect to the ongoing clinical hold of arimoclomol for ALS. In addition, CytRx anticipates that the time frame for initiating the previously planned Phase 2 clinical trial of arimoclomol in stroke recovery will depend on the results of the new preclinical toxicology studies and other factors.
Tamibarotene (formerly known as TM-411, TOS-80T, or Am-80), licensed to Innovive in North America and Europe, is an oral, rationally-designed, synthetic retinoid originally synthesized by the University of Tokyo in 1984. In April 2005, tamibarotene was approved in Japan for use in relapsed/refractory APL.
The FDA has granted Orphan Drug Designation and Fast Track Designation for the use of tamibarotene in patients with relapsed or refractory APL following treatment with all-trans retinoic acid (ATRA) and arsenic trioxide. CytRx expects to rely on Orphan Drug Designation and proprietary data for market exclusivity since tamibarotene chemical matter is off-patent.
CytRx has agreed to acquire Innovive for total consideration of approximately $21.3 million plus the assumption of Innovive's liabilities. The consideration has three components: 1) at the completion of the transaction, the holders of Innovive's fully diluted shares of common stock will be entitled to receive in the aggregate $3.0 million in CytRx common stock valued at a price of $0.94 per share, determined as the volume weighted average price of CytRx common stock for the ten trading days immediately prior to the signing of the definitive agreement on Friday, June 6; 2) CytRx will assume Innovive liabilities and accrued expenses through the closing (as of today, current liabilities are approximately $3.7 million); and 3) CytRx will pay future performance-based milestone earn-outs to Innovive stockholders of up to approximately $18.3 million payable in cash or stock at CytRx's discretion upon the satisfactory completion of specific sales milestones for Innovive product candidates.
The transaction is expected to close in the third quarter of 2008 subject to customary closing conditions including regulatory clearance, approval by stockholders representing a majority of Innovive shares outstanding, and effectiveness of the registration statement that CytRx will file with the US Securities and Exchange Commission (SEC) relating to the CytRx common stock to be paid as consideration to Innovive's stockholders.