Lean on me

Pharmexa and Affitech are looking to reverse merger deal to get them back on track in the antibody field.

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COPENHAGEN, Denmark—In a reverse merger deal intended to get two struggling companies back on their feet, Danish company Pharmexa A/S and Oslo, Norway-based Affitech AS entered into a conditional agreement March 4 to merge the two companies by means of a share-for-share acquisition by Pharmexa of privately-owned Affitech.

In the process, Pharmexa will transform from a cancer and infectious disease vaccine business into a company focused on the research and development of human antibody therapeutic drugs in the area of oncology and "other diseases of unmet medical need."

Under the terms of the agreement, Pharmexa will offer to acquire 100 percent of the outstanding and issued share capital of Affitech in exchange for newly issued shares in Pharmexa. On completion of the transaction, Affitech shareholders will own approximately 70 percent and Pharmexa shareholders 30 percent of the merged company. The combined company will be renamed Affitech A/S and the plan is to continue the company's listing on the Nasdaq OMX exchange in Copenhagen. The existing Affitech drug discovery business in Oslo will be renamed Affitech Research AS.

"Pharmexa has experienced product setbacks over the last year which have led us to consider a variety of strategic options to revitalize the business and to generate future value for our shareholders," says Dr. Achim Kaufhold, CEO of Pharmexa. "The acquisition of Affitech builds on the expertise and capabilities of Pharmexa, but is also a transformational event that moves us into the exciting field of antibody therapeutics, one of the most attractive sectors of the biopharmaceutical industry."

In addition, he notes, after several high-value mergers and acquisitions in the antibody discovery field, Affitech is one of only a limited number of independent companies with a strong position in high-throughput screening of antibody libraries. He says he expects this transaction "will create a technology innovator and product developer that is expected to be able to meet this demand for new antibody therapeutics at all levels-from discovery through to clinical stage products."

The deal was listed among the In Vivo Blog's "Deals of the Week" March 7, with Melanie Senior noting that Affitech lacked the development capability required to attract partnerships or acquisition offers from Big Pharma and the company "needed a quick way to fix the situation—since its shareholders, some of which have been around since 1999, were starting to get itchy for an exit."

For his part, Affitech CEO Martin Welschof admits that organic growth would have been too slow to lift his company from its doldrums. Looking to the combination of his company and Pharmexa, he notes that "Affitech has developed a fully integrated antibody discovery platform consisting of human antibody libraries with high functionality … plus several screening technologies with high degree of versatility."

In its work with other pharmaceutical and biotech businesses, Affitech has demonstrated that its platform is highly productive in identifying competitive new antibody drugs, adding, "as a direct result of the merger, Affitech will have the capability for the first time to develop its own antibody products through human clinical trials."

This isn't the first time Affitech and Pharmexa have done business, with Affitech having acquired the full rights in October 2008 to the diabody technology originally owned by Pharmexa. That acquisition followed an exclusive license of the diabody intellectual property that Affitech obtained in 2007 from Pharmexa to carry out certain non-clinical GLP-compliant studies, as well as sub-licensing arrangements with third parties.

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