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Paladin Labs Acquires ViRexx with Bankruptcy Financing(BioWorld Today Via Acquire Media NewsEdge) Canadian specialty pharma company Paladin Labs Inc. provided debtor-in-possession financing of $1.25 million to the bankrupt Canadian biotech ViRexx Medical Corp., making Montreal-based Paladin the sole shareholder of Edmonton, Alberta-based ViRexx. ViRexx fell on hard times late last year after its monoclonal antibody, OvaRex (oregovomab), failed two pivotal Phase III ovarian cancer trials. The failures led partner Unither Pharmaceuticals Inc., a wholly owned subsidiary of United Therapeutics Corp., to cease development of the product and terminate its deal with ViRexx. (See BioWorld Today, Dec. 6, 2007.) Although ViRexx made progress this year with an early stage hepatitis vaccine program, the company "got caught in this financial storm without the protection of cash,"explained Jonathan Goodman, Paladin's president and CEO, in a news release. ViRexx's cash, equivalents and short-term investments fell to about $300,000 by midyear. In September, a rights offering with LM Funds Corp. fell apart, and ViRexx was unable to secure additional financing. The company laid off all employees except its chairman, Darrell Elliott, and filed an order for reorganization under the Canadian Bankruptcy and Insolvency Act. Enter Paladin, a profitable specialty pharma that markets products like Nuvo Research Inc.'s Pennsaid (topical diclofenac solution) for osteoarthritis and Auxilium Pharmaceuticals Inc.'s Testim (1 percent testosterone gel) for hypogonadism in Canada and certain other countries. Paladin agreed to provide ViRexx with $1.25 million of debtor-in-possession financing, which will be used to pay creditors and legal fees. All shares of ViRexx were cancelled with no payment or other consideration, and Paladin became the sole shareholder of ViRexx, which is being delisted. Paladin plans to seek a partner for the failed OvaRex candidate and for BrevaRex, a Phase I monoclonal antibody for breast cancer. Both are based on ViRexx's AIT platform, which the company acquired from AltaRex Medical Corp. in 2004. (See BioWorld Today, Oct. 18, 2004.) Paladin also plans to partner ViRexx's T-ACT platform, which is focused on disrupting tumor angiogenesis. But Paladin will keep ViRexx's Chimigen vaccine platform, and Goodman said the company has hired back all of the former ViRexx employees who worked on that technology. The lead Chimigen hepatitis B vaccine has completed Phase I trials, and Paladin plans to advance a second-generation version through Phase I by 2010. Research on vaccines for hepatitis C also is underway within the program, and Goodman told BioWorld Today Paladin may seek partners to develop vaccines for additional applications such as avian flu. The Chimigen program will be Paladin's first stab at developing a biologic, but Goodman said it is not indicative of a broader move into that space. Rather, he said, the advanced stage and low price of the program attracted Paladin. Shares of Paladin (TSX:PLB) rose C25 cents (US21 cents) to close at C$12.25 on Wednesday. n ? ? Copyright ? 2008 Thomson BioWorld, All Rights Reserved. |