MIAMI—DOR BioPharma Inc. announced last month that it signed a binding letter of intent to acquire Gastrotech Pharma A/S, a private Danish biotechnology company based in Copenhagen. Gastrotech develops therapeutics based on peptide hormones to treat cancer and gastrointestinal diseases and conditions. Gastrotech was founded on technology developed at the Sahlgrenska University Hospital in Sweden, which is known as the development cradle of growth hormone and IGF-1 research.
In connection with the closing of this acquisition, DOR will issue the stockholders of Gastrotech $9 million in shares of DOR common stock priced at the 10-day volume weighted average price immediately prior to the close of the transaction. In no event will DOR issue less than 20 million or more than 30 million shares of its common stock to Gastrotech's shareholders. This corresponds to a price collar on the transaction of between $0.30 and $0.45 per share of DOR.
DOR will also pay Gastrotech shareholders another $30 million in cash or stock upon the occurrence of a series of developmental, regulatory and commercial milestones, $20 million of which is payable in connection with first product sales of $50 million and $200 million in any calendar year.
The companies intend that the acquisition would include the transfer to DOR of Gastrotech's ongoing clinical programs as well as all intellectual property and facilities. Following the close of the acquisition, DOR's pipeline will be bolstered by the addition of two Phase 2 programs: GTP-010, an analogue of glucagon-like peptide-1 ("GLP-1"), and GTP-200, Gastrotech's wild type ghrelin compound, a naturally occurring peptide hormone produced in the stomach to stimulate appetite.
GTP-010 is being studied in collaboration with Eli Lilly in a Phase 2, double-blinded, placebo-controlled trial for the treatment of pain associated with irritable bowel syndrome (IBS). The product also has application in the treatment of functional dyspepsia. GLP-1 has been shown to reduce gastrointestinal contractions associated with IBS and other GI disorders.
Preclinical and clinical studies have demonstrated GTP-200's positive effect on regulation of appetite, food intake and metabolism. Cancer cachexia is estimated to be a $4 billion market and an unmet medical need affecting 50 percent of all cancer patients and fatal in 40 percent of patients. GTP-200 completed patient treatment in a Phase 1/2 clinical trial for the treatment of cancer cachexia in September 2005. Results from this study will be available later this quarter. GTP-200 is also being evaluated for the treatment of gastrectomized patients as well as for several other indications.