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OTCPicks.com Daily Market Movers Digest Midday Report for Wednesday, July 1st COYN, AFTC, SNRY, SYNJ, JNIP, CRXX
(M2 PressWIRE Via Acquire Media NewsEdge) Our Stocks to Watch today include COPsync Inc. (OTCBB: COYN), Alternative Fuel Technologies Inc. (OTC: AFTC), Solar Energy Initiatives Inc. (OTCBB: SNRY), Syndication Inc. (OTC: SYNJ), Juniper Group Inc. (OTCBB: JNIP) and CombinatoRx Inc. (Nasdaq: CRXX).
Visit http://www.otcpicks.com/microcap.htm to register for our Daily Market Mover's Digest Newsletter and Email Stock Watch Alerts.
COPSYNC INCORPORATED (OTCBB: COYN) "Up 18.42% today on heavy trading. We think this is probably more than a one day play so look for more good volume tomorrow."
Detailed Quote: http://www.otcpicks.com/quotes/COYN.php
Company Profile: http://www.otcpicks.com/copsync-inc.htm
Precision Petroleum Corporation is an independent energy company engaged in the acquisition, exploration and development of oil and natural gas properties in the United States. Precision's objective is to seek out and develop opportunities in the oil and natural gas sectors that represent a low risk opportunity. As well, Precision aims to define larger projects that can be developed with Joint Venture partners.
COYN News:
July 1 - PoliceOne: COPsync Increases Officer Safety, Adds High-Tech Tools to the Squad Car
COPsync, Inc. (OTCBB: COYN) announced that the Company and its software technology were featured in a publication by PoliceOne.com, authored by Senior Editor Doug Wyllie.
COPsync Increases Officer Safety; Adds High-Tech Tools to the Squad Car
On August 3rd, 2000, Texas Highway Patrol Trooper Randall Wade Vetter stopped a 72-year-old driver for not wearing his seatbelt. Unbeknownst to Trooper Vetter, the old man had been known to local officers for statements he'd made - he'd said he would shoot any officer who tried to write him a ticket for not wearing a seatbelt.
Trooper Vetter was attacked by the suspect, who had exited his vehicle and opened fire with a rifle. Trooper Vetter, struck in the head, survived for four days before succumbing to his injuries.
We will never forget Trooper Vetter.
Early History
Getting vital, real-time, officer safety information into the hands of cops on the streets became a life mission of two Texas police officers after the incident that claimed the life of Texas Trooper Randal Wade Vetter. Shane Rapp, a law enforcement officer in the state of Texas for 13 years, and business partner Russell Chaney, an active officer in Texas for 20-plus years, at the time had been technology entrepreneurs with a venture that was eventually sold to eBay. That company, CARad.com, leveraged legacy systems within the auto dealer industry that enabled dealers to list their cars on eBay. Basically, with just a few clicks of a computer mouse (and within about two minutes or less) a dealer could have a car listed on eBay.
Less than a year after launching their technology, Rapp's and Chaney's company controlled about a quarter of the cars listed on eBay - CARad.com was selling $30K, $40K, and $50K cars, meaning a tiny Texas startup represented a vast volume of eBay's gross merchandise sales. For fairly obvious strategic reasons, the Silicon Valley giant practically had to buy out Rapp and Chaney to guarantee that eBay's financial destiny remained squarely in the hands of Meg Whitman and Co.
"That kind of put us in a position to where we could come back and help our brothers in blue and also give us an opportunity to really improve the profession we absolutely love doing," Rapp, who is Co-Founder and Chief Technology Officer for COPsync, told PoliceOne in an exclusive interview.
"Like I said, that set us up to where we could pretty well do what we wanted to do, but law enforcement is our profession and we wanted to improve the profession," Rapp said.
"During the build of that company, there was a Texas trooper who made a traffic stop on a 72-year-old man for a seat belt violation. Twenty-two seconds into the traffic stop, Trooper Randall Vetter lay on the ground fatally shot. That particular trooper worked in our county. I had dispatched the trooper for several years and worked with him out on the roads for several years. So of course working together, you develop that bond and that friendship..."
Recall that this 72-year-old suspect had previously stated that he was going to kill a police officer. This information was captured in a local database because he had made a threat to an off duty officer. The off duty cop went back, did a report, putting it in the system to be disseminated among officers in that department and quite probably to officers with the other departments in that area. Rapp and his colleagues believe that if Trooper Vetter had access to that information, the incident could have turned out much differently.
"This trooper had recently transferred to that county and did not get that information, and there was no way to notify him of it. So we said 'absolutely not - this cannot happen ever again; we need to do our best to keep that from happening'. It was a tragic situation and our way of coping with it was to develop something that would keep it from happening in the future."
After spending 18 months on research and development, COPsync was launched in April 2004.
How it Works
Rapp says that the whole premise behind COPsync was to build an officer safety notification system. He says that in doing the research to accomplish that, his team discovered a need to work with lots of other technology vendors. Unfortunately, he says, most law enforcement systems in this space are very, very proprietary.
"They don't play well together and it causes issues amongst law enforcement agencies, so from day one we took a position that we will always remain neutral. We said, 'let's build for the mobile environment; let's actually provide it to the guys that are riding around in the patrol car.' And that meant we had to be hardware agnostic, vendor agnostic, and to be honest with you I could almost venture to say that we are technology agnostic. What I mean by that is, we built our technology from the foundation up to work with any possible system that is out there."
"So you're talking all sorts of database types - SQL [Structured Query Language], Unix, Oracle, Informix, you-name-it, we should be able to push data back to those databases. We're working with systems that are written in many different languages. We can transfer data using several different formats, as needed by third party vendors, including simple comma or tab delimited flat files, or XML based formats that comply with the Department of Justice's GJXDM [Global Justice XML Data Model]."
So much for the "back end" technology that makes it go - what does the cop in the squad car or dispatcher sitting at a desk in the station see? What tools does it put in the hands of law enforcement officers?
COPsync is primarily used with touch-screen laptops. The technology team listened to many officers in the field and from that feedback knew that the most useful way to utilize the software would be to just touch a button on the screen to navigate around and to enter keyboard strokes like license plate numbers, suspect names, etc. The buttons are very simple and easy to use. If you want to run a vehicle registration, you just hit the button that says 'Registration.' If you're looking to do an 'Offense Report,' you hit the button that has offense report on it.
In the instance where you're not looking at a menu of buttons, the interface presents information in a large, easily-readable font. In addition to the "at-a-glance" usability of the visual display, the system also "speaks" to the officer. But unlike most computer voices, this one is not an irritation or a distraction - the technology here could easily have been the system's downfall but the engineers and developers clearly had the eyes AND EARS of the street cop at the tops of their minds.
Speaking of himself and partner Chaney, Rapp explains, "We're both still active officers in the state but we didn't know everything there was to know about law enforcement, so we actually brought some consultants. We brought in a veteran of the Texas Highway Patrol, brought in a veteran of the La Port Police Department, and then we brought in a criminal district attorney as well as a reserve deputy sheriff. That way we could kind of cover the whole gamut from an officer's perspective."
In addition to some of the more basic features provided in the COPsync solution (such as secure, private Instant Messenger and e-mail), there are many reports and other functions that can be accessed from a rack-mounted laptop in the squad car that's running COPsync. There is a comprehensive breakdown of features on the COPsync Web site but just a few examples of the system's capabilities are:
The COPsync e-Citation module, which was "created to provide a simplified, time saving method of capturing citations real-time in an electronic format." The company says that "capturing this data electronically allows for immediate transmission of the citation data, making it visible to other officers immediately."
The COPsync Crash Report Builder, which provides a "standardized interface for completing state mandated crash reports." The company says that states with Crash Reporting Bureaus which are equipped with "electronic submission capabilities, the information can be electronically transmitted to the bureau immediately upon completion and agency approval of the report."
The COPsync DUI/DWI reporting module, which collects information about all people associated with the case including the driver, other occupants of the vehicle, witnesses, etc. The company says that "information obtained from scanning the Driver's Licenses is used to auto-populate not only the DUI/DWI report, but also citations, vehicle tow sheets, jail forms, court required complaints, offense reports, government (local, state, and federal) mandated forms, and more."
The COPsync Law Reference Library module "houses a complete set of state-specific statutes and traffic laws, with enhanced and simplified query capabilities." The company says that "officers are frequently asked by citizens about certain laws; even as simple as what type of restraint their child is required to have. The Law Reference dramatically simplifies finding these answers."
One of the most impressive capabilities, however, goes right back to officer safety. If at any time an officer enters information on a subject who has a BOLO, an arrest warrant, or any history of violence against an officer included in the system records, a subtle but unmistakable audible tone is emitted within the squad car. It's enough sound to alert the officer, but not enough to be heard by the subject outside, and it's sheer genius. If you (or your kids) play video games, think about the sound you hear when an enemy fighter has "missile-lock" on a player, and you get a pretty good idea of the type of sound we're talking about.
Furthermore, as soon as that audible tone and visual alert happen in the squad on the scene, the system automatically transmits an officer safety alert to all COPsync-equipped patrol cars within a 50 mile radius regardless of their jurisdiction.
"As you know across the Unites States there are many places where a Sherriff's Deputy may be patrolling and his closest backup may be a city police officer or a state officer," Rapp explains. "So we made it to where it will even cross jurisdictions. Basically we just want to get somebody there as fast as we can. And so the system can go out within that 50 mile radius and notify those other units."
The Future
Rapp concludes, "There are three pillars that we look at now. Once the product was developed we kind of honed in and this was our focus: Officer safety being number one, information-sharing being number two and officer efficiency being number three. So by collecting all the data in a standardized format we now share that data across any agency that's on the COPsync system as well as if they use our mobile piece - we will push it to their records, their jail, and/or their court system."
The company and its technology have evolved over the years, and the COPsync team continues to innovate. Many of those innovations come from the interactions that Rapp and his colleagues have on a daily basis with cops on the streets.
"We recently received a phone call from Chief Deputy Kurt Fisher in Rains County, Texas. They had an officer who basically went into distress - they couldn't raise him on the radio and they couldn't raise him on the cell phone. Basically he's missing in action. No radio contact, no cell phone contact. They were able to use the COPsync system to know exactly where he was through our AVL and GPS capabilities, and actually get an officer to his location. One of the new things that's coming out in the next release of the product - if you're familiar with the etone button that's on radios you'll know what I mean - COPsync as a result of this particular situation will now have an officer-initiated etone-like button. If he does go into distress he can hit that button and it takes care of business, and he knows that help's on the way. A panic button if, you will."
ALTERNATIVE FUEL TECHNOLOGIES INCORPORATED (OTC: AFTC) "Up 23.68% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/AFTC.php
Alternative Fuel Technology Inc. is a research & development organization engaged in the design, development and prototype manufacturing of advanced fuel systems for use with a new alternative fuel -- dimethyl either (DME). AFTC has developed practical, low-cost fuel injection equipment for DME fueled vehicles and currently provides complete DME fuel systems for testing and research purposes in addition to retrofit systems that can be used with most diesel engines. The company's ultimate goal is series production of DME fuel systems for the global automotive market by 2011.
AFTC News:
July 1 - Alternative Fuel Technologies Completes Submission of Its Innovative Advanced Propulsion Solution for the US Navy
Alternative Fuel Technologies Inc. (OTC: AFTC) responded to an SBIR invitation (Topic number NO 92-122 - Navy) by submitting its proposal to develop an innovative advanced propulsion solution for future combatant craft with breakthrough technology for multi-fuel engines weighing three to five times less than conventional diesel engines of the same horsepower.
The US NAVY, and its NAVY SEALS in particular, utilize assault craft and combatant patrol vessels that rely on speed, acceleration, and maneuverability to protect the lives of the troops and secure multi-mission success. The increasing demand to carry greater "payloads" (e.g. combat troops, weapons, and ballistic armor) inherently reduces the current craft's overall performance, including speed, agility, even survivability of the troops. The US NAVY is in need of an alternative to current diesel fuel propulsion systems; one that allows for increased payloads without sacrificing speed and acceleration. More specifically, an innovative solution that decreased "weight to power ratios" significantly, thereby enabling increases in mission system payload weight and personnel transport capability.
Alternative Fuel Technologies, Inc. (AFTC) has over 40 years of engine design experience, including diesel and alternative fuels, with its core business in the development and prototype manufacturing of advanced fuel systems that burn Dimethyl Ether or "DME." Alternative Fuel Technologies, Inc. (AFTC) submitted its proposal on June 15, ahead of schedule, and expects an answer in the next 60 to 90 days. The project includes three phases. Phase one could generate a total $100,000; Phase two could exceed $1,000,000, and Phase three which includes the completion of a full prototype engine installed in a marine craft, would likely approach $20,000,000. The US NAVY defines only the scope of the work rather than the contract dollar amount.
CEO Jim McCandless reported that, "All of us here in management at AFTC feel really solid about the proposal we submitted. Our proposal is not only extremely competitive, but we believe our technological ingenuity and ability to provide the next generation of fuel solutions can satisfy the Navy objectives of hauling greater weight without putting our troops lives at risk. Gaining this opportunity would be a win for the company of course, but a project we would be elated to be a part of."
DME is a new ultra-clean diesel fuel replacement that can be produced from abundant resources. These include natural gas, landfill methane, coal and biomass. At current oil prices, DME can be produced and distributed at less than 1/2 the cost of conventional fuel. When burned in a diesel engine, all soot emissions are eliminated and NO emissions are lowered dramatically without the use of expensive exhaust after treatment devices.
SOLAR ENERGY INITIATIVES INCORPORATED (OTCBB: SNRY) "Up 12.73% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/SNRY.php
Solar Energy Initiatives, Inc. is dedicated to reducing the world's dependence on fossil fuels by selling solar thermal and photovoltaic (PV) technologies, while building a profitable company. We are executing on a three pronged approach to achieve our plan. This includes: continuing development of the fastest growing dealer network in the U.S. that sells and installs solar solutions to homeowners and commercial customers; placing solar systems on large commercial buildings and selling the energy output to the owner/occupant(s); and becoming a developer of solar parks bringing together landowners, utilities and our corporate resources to build large photovoltaic installations.
SNRY News:
July 1 - Solar Energy Initiatives Announces Green Energy Alliance with RS&H and K Power Inc.
Solar Energy Initiatives, Inc. (OTCBB: SNRY), executing on a grass roots campaign, "RENEW THE NATION", to help redeploy a portion of the U.S. work force and focus on reducing the world's dependence on fossil fuels by selling solar thermal and photovoltaic (PV) technologies, today announced that the Company is a founding member of the Green Energy Alliance, a strategic affiliation with RS&H, one of the nation's leading facilities and infrastructure consulting/engineering firms, and K Power Inc., a provider of full service solar energy solutions to commercial and industrial users. The Green Energy Alliance will combine member areas of expertise providing turn-key solar solutions including project financing to commercial and solar park projects located in North America and the Caribbean.
RS&H and K Power are leaders in energy and power generation/construction and as a combined entity possess the ability to build commercial solar projects and solar parks that could extend to well over 100 megawatts. The newly formed relationship will provide Solar Energy Initiatives with both new business relationships and access to capital through affiliated relationships. The companies' parallel operational focus and business strategies provide a platform for a long lasting and mutually successful relationship.
"This alliance provides Solar Energy Initiatives with the experienced and capable relationships needed to target larger sized commercial solar projects," stated, David Fann, Chief Executive Officer, of Solar Energy Initiatives. "We believe that the Company now possesses all the necessary tools to target more large scale and higher margined projects much like the 18 megawatt solar park that we recently announced. It is important for our strategic business plan that we form strong partnerships with top notch power companies, funding partners and consulting firms so that we can continue the rapid market penetration we are experiencing. We look forward to signing new contracts that mirror and exceed our $80 million solar park in California."
RS&H, founded in 1941, is a multi-disciplined facilities and infrastructure consulting firm whose client-centered program structure provides value-added solutions to clients around the world. RS&H, an Engineering News Record (ENR) Top 100 ranked firm has offices in Florida, California, Colorado, Georgia, Illinois, Massachusetts, Michigan, Minnesota, Missouri, North Carolina, Ohio, Texas, Utah, Virginia and Washington DC. RS&H's market sectors include Aerospace, Aviation, Commercial, Corporate, Defense, Education, Federal, Health, Public Infrastructure, Science/ Technology, Transportation and Construction Engineering Services.
"We are extremely pleased to be part of the Green Energy Alliance and to be working with SNRY to assist in deploying solar solutions for large scale commercial projects," stated, Ron Ratliff, Executive Vice President of RS&H. "With the combined capabilities of the Alliance we expect to capture significant market share for large solar projects. Moving forward we will be targeting all sizes of commercial, industrial, institutional and solar park projects. As a combined group we now have the ability to complete projects in excess of 100 megawatts. In addition, the Alliance will work closely with a variety of governmental agencies to optimize and secure substantial grant money for the education and deployment of alternative energy."
K Power, Inc., a wholly owned subsidiary of the Dana B. Kenyon Construction Company, is a provider of solar thermal and solar electric systems for large scale projects. K Power excels in the design, installation, service and incentive/rebate procurement of solar power.
Matt Kenyon, President of K Power, Inc., commented, "The formation of the Green Energy Alliance will allow all the partners to secure large scale solar projects. With our expertise in the design and installation of solar solutions we have the ability along with RS&H and SNRY to work with states and municipalities to deploy low cost energy solutions."
ABOUT K POWER, INC.
A provider of turn key solar thermal and solar electric systems that fit the unique requirements of our clients' energy needs. From design and installation, to service and incentive/rebate procurement, K Power, Inc. helps our customers to realize substantial savings on energy costs, while supplying a clean source of energy straight from the power of the sun. As a division of the Dana B. Kenyon Construction Company, K Power has the ability to apply resources from our established 25-year general contracting company, and will make sure that your solar thermal and/or solar electric system is completed with professional detail, quality, and service.
ABOUT RS&H:
RS&H is one of the nation's leading facilities and infrastructure consulting firms whose client-centered program structure provides value-added consulting solutions to clients around the world. With a tradition that began in 1941, RS&H has 32 offices nationwide, which provides full service architectural, engineering, planning and environmental consulting services to clients world-wide. RS&H is an industry recognized leader in providing advanced energy services, LEED and advanced technology to clients world-wide.
SYNDICATION INCORPORATED (OTC: SYNJ) "Up 68.00% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/SYNJ.php
Syndication, Inc., a development stage company, operates as a consulting company in the United States. It acquires controlling interests in or to participate in the creation of, and to provide financial, management, and technical support to development stage businesses, e-commerce businesses, and traditional brick-and-mortar businesses. The company assists target companies in various areas, including the development and implementation of business models to provide solutions to traditional companies; building corporate infrastructure, such as a management team, a qualified sales and marketing department, information technology, and finance and business development; and managing rapid growth and flexibility to adopt to the changing Internet marketplace and technology. It also assists target companies in evaluating, structuring, and negotiating joint ventures, strategic alliances, joint marketing agreements and other corporate transactions; and by providing advice relating to corporate finance, financial reporting, and accounting operations. Syndication, through its subsidiary, Sy-Med Decompression, Inc., provides non-surgical treatment option for patients with back pain due to lumbar disc herniation, degenerative disc disease, sciatica, facet syndrome, and spinal stenosis. The company, formerly known as Syndication Net.com, Inc., was founded in 1999 and is headquartered in Washington, D.C.
SYNJ News:
July 1 - Syndication Inc. Announces Mac Marshall Jr. Moves Pinnacle Project Forward With Methes Energies Canada Inc.
Syndication Inc. (OTC: SYNJ) reports that on April 3rd, 2009 McCutcheon Marshall Jr., President and Chairman of the Board for Pinnacle Energy Inc., the wholly owned energy subsidiary of Syndication Inc., executed a Territory and Purchase Agreement with Methes Energies Canada Inc. Methes Energy is located in the Mississauga, province of Ontario, Canada and is in the business of developing, marketing and selling turnkey continuous flow biodiesel processor systems named 'the Denami 600.'
The agreement calls for the purchase of multiple 'Denami 600' units and excludes Methes from soliciting any engagements in the Counties of Williamsburg and Berkeley in the State of South Carolina.
When asked about the Methes relationship Marshall stated "its just one of many developments that Sorrentino and I have been working on for months. It is true that we are sharing board members with Pinnacle, SRE, Methes and now SunSi, but, one of the most important developments of the project is the financial community cultivated by Syndication. It's a great team and at this point we see no limits to our potential. My job is to direct the Federal and State financing in both the grant and loan activities for the Company as well as overseeing the general implementation of its business plan. Because of my relationship with Pinnacle, we have been able to move forward at an accelerated pace and achieve goals, including grant and loan financing, that I have been advised not to speak of at this time. I would yield to Mr. Sorrentino's advice to the CEO of Syndication Inc., 'it's best to hold our cards close to the chest for the time being'," said McCutcheon Marshall Jr. the President of Pinnacle Energy Inc. and Sentinel Renewable Energies Inc.
As a point of clarification the Company would like to state that on April 16th, 2009 it officially engaged the 'Rossi Law Firm' to handle the project developments of its Pinnacle Energy Division. Mr. Rossi is a Principal of the firm with over 20 years of experience at securities law, international legal affairs and direct investment. Mr. Rossi provides integrated strategies for managing the most difficult of structural issues including securities offering materials, SEC filings to go public, anti-takeover strategies, financial presentations and capital raising plans, annual shareholder meeting preparation, valuations and corporate governance.
The Company wishes to clarify an incorrect news release on April 16th, 2009, stating that Capital Keys was a law firm and that Rich Rossi was a founder of that firm. For the record, Capital Keys is a Washington DC, lobbying firm not a law firm, and Rich Rossi is a Principal of Capital Keys, not a founder. The Company apologizes for any confusion. Pinnacle News Pending.
JUNIPER GROUP INCORPORATED (OTCBB: JNIP) "Up 33.33% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/JNIP.php
Juniper Group, Inc., through its subsidiaries, provides broadband installation and wireless infrastructure services in the United States. Its services include deployment of wireless/tower systems; maintenance and upgrading of wireless telecommunications sites; and site surveys, co-location facilitation, tower construction and antenna installation to tower system integration, and hardware and software installations. The company offers its services primarily to telecommunication companies. Juniper Group also engages in the acquisition, exploitation, and distribution of rights to films for various media, such as DVD, satellite, home video, pay-per view, pay television, television, and independent syndicated television stations. The company was founded in 1987 and is headquartered in Boca Raton, Florida.
JNIP News:
July 1 - CombinatoRx and Neuromed Sign Merger Agreement
Juniper Group, Inc. (OTCBB: JNIP) announced that the operating revenues for the quarter ending June 30, 2009 of its wholly owned broadband subsidiary will exceed expectations in its first quarter of operations, and should result in operating revenues in excess of $100,000.
This is particularly meaningful when taking into account the fact that the company has only been in full operating mode for approximately 45 days.
CEO & President, Vlado P. Hreljanovic said today, "We are happy with these results, and proud of our great crews who have made this operation the success that it is. We are hopeful that this trend will continue, and look forward to adding more technical personnel and assets, as well as expanding to additional geographic areas sooner than we anticipated."
COMBINATORX INCORPORATED (NASDAQ: CRXX) "Up 5.01% in morning trading"
Detailed Quote: http://www.otcpicks.com/quotes/CRXX.php CombinatoRx, Incorporated (CRXX) is pioneering the new field of synergistic combination pharmaceuticals and has a broad product portfolio in phase 2 clinical development. Going beyond traditional combinations, CombinatoRx creates product candidates with novel mechanisms of action striking at the biological complexities of human disease. The lead programs in the CombinatoRx portfolio are advancing into later stage clinical trials based on the strength of multiple positive phase 2a trial results. This portfolio is internally generated from the CombinatoRx proprietary drug discovery technology which provides a renewable and previously untapped source of novel drug candidates. The Company was founded in 2000 and is located in Cambridge, Massachusetts.
CRXX News:
July 1 - CombinatoRx Presents Full Data on Synavive Phase 2 Knee OA Trial at EULAR 2009
* Merger to Create a Sustainable Biotechnology Company: Brings Together Significant Product Assets, Unique Discovery Capabilities and Financial Resources
* Conference Call Scheduled for July 1 at 8:30am ET
CombinatoRx, Inc. (Nasdaq: CRXX) and Neuromed Pharmaceuticals, Inc., a privately-held biopharmaceutical company, announced that they have entered into a definitive merger agreement under which CombinatoRx and Neuromed will merge in an all-stock transaction. Under the terms of the merger agreement, CombinatoRx is expected to issue approximately 36 million new shares of its common stock to Neuromed stockholders with each party owning approximately 50% of the voting power of the merged organization upon closing. Relative ownership of CombinatoRx will then be adjusted based upon the outcome of the FDA's review of the NDA product candidate, Exalgo.
This merger brings together the product assets and financial resources of both organizations, including potential Exalgo milestones and royalty revenue and Neuromed's proven drug development expertise, with the CombinatoRx portfolio of product candidates and its unique drug discovery capabilities. The rights to Exalgo, designed to be a once-daily, oral hydromorphone treatment seeking FDA approval for chronic to severe pain, were recently acquired by Mallinckrodt Inc., a subsidiary of Covidien plc, for $15 million in upfront payments, additional development funding of up to $16 million to cover internal and external costs associated with Exalgo, an approval milestone of $30 million, which could potentially increase up to $40 million, and tiered royalties on Exalgo net sales after approval. Neuromed has filed a New Drug Application for Exalgo with the FDA, which has a November 22, 2009 PDUFA review date.
"By combining forces with Neuromed, we can create a sustainable biotechnology company that has significant product assets, unique discovery capabilities and substantial financial resources. In addition, Christopher Gallen and the rest of the Neuromed management team will bring their considerable product development expertise to bear on the CombinatoRx pipeline and discovery platform. Collectively, the Neuromed team have contributed significantly to more than 10 successful NDAs or other major regulatory submissions and they have launched over 10 pharmaceutical products" said Robert Forrester, Interim President and CEO of CombinatoRx. "Further, this is a unique merger structure, with a contingent valuation element providing downside protection and upside participation for shareholders. This merger with Neuromed will leverage the operational efficiencies created by CombinatoRx's recent restructuring, including workforce reductions and divestiture of our Singapore subsidiary, to focus on our core technology, simplification of our balance sheet and reduced cash burn going forward. As a result, we expect to have sufficient cash to continue operations into 2012," concluded Forrester.
"Through this merger with CombinatoRx, we have the opportunity to build a biopharmaceutical organization with a novel approach to drug discovery and development," commented Christopher Gallen, MD, Ph.D., President and CEO of Neuromed. "CombinatoRx's unique discovery approach and the multiple mid- and early-stage product candidates in the CombinatoRx pipeline, combined with Neuromed's clinical development experience, project management driven culture and ion channel inhibitor programs, will enable the potential creation of new therapeutics. The recent CombinatoRx-Novartis oncology collaboration further recognizes the potential of the CombinatoRx technology by combining the innovative discovery for which Novartis is well known with the systematic exploration of combination therapy made possible by the CombinatoRx platform."
Details of the Proposed Transaction
Under the terms of the transaction agreements, CombinatoRx will issue shares of common stock to Neuromed stockholders with each party's pre-merger stockholders owning approximately 50% of the voting power of the merged organization upon closing. Based on the timing of the FDA's approval decision on Exalgo, the percentage ownership will be adjusted by issuing shares out of escrow to former Neuromed holders or returning shares from escrow back to CombinatoRx.
* If Exalgo approval is received by December 31, 2009, pre-merger CombinatoRx stockholders will own 30% of the combined company.
* If approval is received between January 1, 2010 and September 30, 2010, pre-merger CombinatoRx stockholders will own 40% of the combined company.
* If approval is received between October 1, 2010 and December 31, 2010, pre-merger CombinatoRx stockholders will own 60% of the combined company.
* If approval is not received by December 31, 2010, pre-merger CombinatoRx stockholders will own 70% of the combined company.
The boards of directors of both CombinatoRx and Neuromed have approved the proposed merger transaction, which is subject to customary closing conditions, including receipt of various required approvals from the CombinatoRx and Neuromed stockholders. Subject to customary closing conditions, including receipt of various required approvals from the CombinatoRx and Neuromed stockholders and the effectiveness of an amendment to the organizational documents of Neuromed Canada to facilitate the conversion of its outstanding indebtedness, the transaction is currently expected to close during the fourth quarter of 2009. CombinatoRx stockholders representing approximately 35% of the voting shares of CombinatoRx have already committed to vote in favor of the transaction. Neuromed stockholders representing in excess of 60% of the voting shares of Neuromed have committed to vote in favor of the transaction. Upon closing of the merger, the combined company will have the CombinatoRx name and is expected to trade under the stock symbol (CRXX) on the NASDAQ Global Market. Wedbush Morgan Securities Inc. acted as financial advisor to CombinatoRx in this transaction and JMP Securities acted as exclusive financial advisor to Neuromed. Goodwin Procter served as legal advisors to CombinatoRx and WilmerHale served as legal advisors to Neuromed.
The Combined Company
The combined company will have substantial opportunity for building value going forward, including:
* Exalgo, a significant late-stage product opportunity which was recently acquired by Mallinckrodt Inc., a subsidiary of Covidien plc, as a key asset in their emerging branded pain management franchise. The key terms of the deal are $15 million in upfront payments, additional development funding of up to $16 million to cover internal and external costs associated with Exalgo, an approval milestone of $30 million, which could potentially increase up to $40 million, and tiered royalties on Exalgo net sales after approval.
* Complimentary product pipelines, spanning from discovery through NDA.
* Experienced leadership team with substantial product development expertise and many drug approvals.
* Validated drug discovery technology as illustrated by the CombinatoRx-Novartis oncology collaboration which has the potential to generate future product opportunities and milestone payments for CombinatoRx.
* Multiple clinically-validated product assets including mid-stage pipeline programs such as Synavive and CRx-401, Prednisporin (which is licensed to Fovea), and early stage assets such as the CombinatoRx B-cell malignancy program, CRx-601 for Parkinson's disease and Neuromed's ion channel inhibitor programs aimed at pain, epilepsy and other disorders.
The management team of the combined company will be comprised of Christopher Gallen, MD, Ph.D., President and CEO; Robert Forrester, Executive Vice President and COO; Justin Renz, Senior Vice President and CFO; Terrance Snutch, Ph.D., Senior Vice President and CSO; Gene Wright, Ph.D., Senior Vice President and Chief Development Officer; and Jason Cole, Senior Vice President and General Counsel. Alexis Borisy is stepping down as President Chief Executive Officer of CombinatoRx to pursue other activities. Mr. Borisy will support CombinatoRx as a member of its scientific advisory board.
The proposed Board of Directors of the combined company will consist of ten members: Frank Haydu, Chairman; Mark Corrigan, MD, EVP, Research & Development, Sepracor Inc.; Sally Crawford, former COO of Healthsource; Todd Foley, Managing Director, MPM Capital; William Hunter, MD, MSc, Chairman of the Board, President & CEO, Angiotech Pharmaceuticals Inc.; Michael Kauffman, MD, Ph.D., CMO, Proteolix, Inc.; W. James O'Shea, former COO, Sepracor, Inc.; Hartley Richardson, President & CEO, James Richardson & Sons, Ltd.; Christopher Gallen, MD, PhD, President & CEO and Robert Forrester, EVP and COO.
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