Chromos Enters into Agreement to Acquire CellExSys
-Gaining New Cell Therapy Technology-
BURNABY, BC, June 22 /PRNewswire-FirstCall/ -- Chromos Molecular Systems Inc. ("Chromos"; TSX: CHR) announced today that it has entered into a definitive
agreement under which Chromos has agreed to acquire CellExSys Inc. ("CellExSys"). Under the terms of the agreement, Chromos will acquire all of
the outstanding shares of CellExSys through the merger between CellExSys and a
special purpose wholly owned subsidiary of Chromos. CellExSys, based in
Seattle, WA is a majority-owned subsidiary of Targeted Genetics Corporation
("Targeted Genetics"; NASDAQ: TGEN). The acquisition will provide Chromos with
new cell therapy technology and a strong preclinical pipeline to support
product development to treat infectious diseases and cancers.
Under terms of the agreement, Chromos will acquire all of the issued and
outstanding shares of CellExSys by issuing to CellExSys shareholders at
closing, 1,500,000 common shares of Chromos and a convertible debenture in
principal amount of Cdn $3,375,000 (see details below).
"This strategic acquisition combines the proprietary technology of Chromos with
CellExSys' proprietary T cell therapy technology to accelerate our product
development pipeline and expand our partnering opportunities," said Alistair
Duncan, President and Chief Executive Officer of Chromos. "We believe this
transaction creates greater long-term value for both Chromos and CellExSys
shareholders because it allows us to realize the commercial potential of cell
therapy through our ability to now access multiple product opportunities in a
variety of disease indications. Consistent with our corporate strategy to grow
Chromos into a leading cell therapy company, this acquisition enables us to
make the critical transition from a platform company to a product development
company, while allowing us to build on the advancements realized in our
cellular protein production programs".
"This transaction provides an infrastructure to advance T cell therapy
technology into human clinical trials, and allows Targeted Genetics, along with
other shareholders of CellExSys, to participate in the value creation and
benefit from the potential value that can come with the advancement of this
technology," said H. Stewart Parker, President and Chief Executive Officer of
Targeted Genetics. "We believe that CellExSys has a substantial intellectual
property position related to a unique approach for generating large numbers of
antigen-specific T cells rapidly while retaining the antigen specificity of
these cells. This Rapid Expansion Method (REM) technology can be used to
generate autologous antigen-specific cytotoxic T lymphocyte (CTL) isolates for
use in adoptive immunotherapy, supporting the opportunity inherent in this
acquisition to develop products to treat a variety of diseases, such as cancers
or infectious diseases." The acquisition will give Chromos a robust cell therapy technology that can be
used to rapidly generate substantial quantities of certain types of white blood
cells (antigen-specific T cells) outside of the body before administering them
for therapeutic applications. This technology, originally developed at The Fred
Hutchinson Cancer Research Center in Seattle, WA, has been licensed exclusively
to CellExSys, and can be used to treat a variety of chronic diseases.
The goal of cell therapy is to amplify the number of immune system cells in the
body in order to enhance the body's natural ability to recognize and fight
disease. Cell therapy technology has broad applications in the treatment of
diseases with a projected market value of US$5.2 billion by 2010.
Chromos said it anticipates initiating a Phase I/II study for the treatment of
Hepatitis B in the second half of 2005.
Acquisition Rationale - The acquisition will enrich Chromos' gene-based cell therapy program
with the addition of a technology and a patented process platform to
its portfolio. The REM (Rapid Expansion Method) technology allows the
identification and rapid expansion of patient-specific, antigen-
specific T cells. This technology provides Chromos with a new approach
to the development of cell therapies and will be additive to Chromos'
on-going research in gene-based cell therapy. - This acquisition provides Chromos with an accelerated entry into the
clinic, with positive preclinical data in Hepatitis B therapy
- The combined technologies enables Chromos to potentially become a
leader in non-genetically modified cell therapies in North America
- Having established a number of collaborations with academic leaders in
cell therapy in the past year, this acquisition may provide Chromos
with increased partnering opportunities in the areas immunotherapy and
genetic diseases
- Chromos' expertise in gene-based cell therapy research will be
strengthened by the addition of product development personnel.
Details of the Acquisition
On closing Chromos will issue to CellExSys shareholders 1,500,000 common shares
of Chromos and a secured convertible debenture in principal amount of Cdn
$3,375,000. The convertible debenture will bear interest at the rate of 2% per
annum and the principal will be due in two annual payments over two years. The
principal will be repayable by Chromos at its option either in cash or by the
issuance of common shares of Chromos with a minimum conversion price of Cdn
$1.65 per share and a maximum conversion price of Cdn $2.75 per share.
Upon closing the 1,500,000 common shares issued to CellExSys shareholders will
represent approximately 8.1 % of Chromos then issued and outstanding shares. If
Chromos elects to pay the entire principal amount of the convertible debenture
by the issuance of common shares of Chromos, a maximum of an additional
1,980,520 common shares would be issued upon conversion. Together with the
1,500,000 shares issued at closing an aggregate maximum of 3,545,455 common
shares could be issued. Following this issuance of these shares CellExSys
shareholders would hold 17.2% of Chromos shares based on Chromos' current
number of issued and outstanding Chromos shares.
The transaction which is scheduled to close within 2 months, is subject to
approval of CellExSys shareholders and other customary conditions, including
regulatory approval. Holders of more than 90% of CellExSys issued and
outstanding shares have agreed to support and vote in favour of the
transaction. The proposed acquisition has the unanimous support of the
Directors of both Chromos and CellExSys.
About CellExSys CellExSys, Inc. was established in late 2000 as a subsidiary of Targeted
Genetics Corporation, with a focus on commercializing a robust portfolio of
cell therapy assets that are outside of Targeted Genetics' core focus. CellExSys' patient-specific technology platform has yielded promising results
in preclinical studies of a variety of viral diseases and cancers.
About Chromos Chromos Molecular Systems Inc. is a public, Canadian biotechnology company
leading the development of innovative therapies using a proprietary gene
delivery and expression system for the production of therapeutic proteins and
gene-based cell therapies. Chromos is achieving this objective with a unique
mammalian chromosome technology platform from which multiple product candidates
can be developed.
Chromos' technology, referred to as the ACE System, is a unique and powerful
vehicle for transferring genes into cells for subsequent expression of
proteins. The ACE System demonstrates a significant improvement in cell
engineering technology and gene expression, namely, unparalleled speed in
engineering cell lines for protein production, high-level expression of
proteins and long-term stability. These features make the ACE System well
suited for the production and manufacture of biopharmaceuticals and for
application in gene-based cell therapies.
Risks and Uncertainties Certain of the statements contained in this press release are forward-looking
statements which involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
To the extent possible, management implements strategies to reduce or mitigate
the risks and uncertainties associated with the Company's operations. Operating
risks include (i) the ability to successfully obtain proof of the effectiveness
of the ACE System; (ii) the ability to complete and maintain corporate
alliances relating to the development and commercialization of the Company's
technology; (iii) the ability to obtain and enforce patent and other
intellectual property protection for the Company's technology; (iv) market
acceptance of the Company's technology; (v) the competitive environment and
impact of technological change; (vi) the continued availability of capital to
finance the Company's activities; (vii) the Company's ability to attract and
retain employees to carry out its business plans and (viii) the timely
development and commercialization of any technology or products that are
contingent on the completion and maintenance of corporate alliances with third
parties. Further details on Chromos' operating risks can be found in the
Company's Annual Report to Shareholders.
FOR FURTHER INFORMATION PLEASE CONTACT:
Helen Zeitler
Director, Investor Relations & Communications
Tel: (604) 415-7127
Email:
Website: http://www.chromos.com/ (R) is a registered trademark of Chromos Molecular Systems Inc. DATASOURCE: Chromos Molecular Systems Inc.
CONTACT: Helen Zeitler, Director, Investor Relations & Communications, Tel: (604) 415-7127, Email: , Website: http://www.chromos.com/
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