Taking stock

CTI to acquire Systems Medicine in $20M stock deal

Lloyd Dunlap
SEATTLE—In aclassic case of how people make the difference, Cell Therapeutics Inc. hasentered into an agreement to acquire Systems Medicine Inc., a privately heldoncology company, in a stock for stock merger valued at $20 million. SMistockholders could also receive a maximum of $15 million in additionalconsideration, payable in either cash or shares of CTI common stock, upon theachievement of certain regulatory milestones.

According to Tim Williamson, CBO and a founder of SMi, thedeal was struck after he began conversations with CTI Chief Medical Officer Dr.Jack Singer about a possible collaboration to work on improving the solubilityof another anti-cancer drug—an SRC inhibitor. As talks progressed, it becameclear, he says, that the companies had more strategic compatibilities,eventually leading to the merger. Under the terms of the agreement, SMi willoperate as a wholly owned subsidiary of CTI, utilizing its genomic-basedplatform to guide development of CTI's oncology products, which includeBrostallicin.

Brostallicin is a synthetic, second-generation DNA minorgroove binder with potent anti-cancer activity in experimental tumor models,the newly merged partners say. The mechanism of DNA interaction is novel,binding covalently to DNA within the minor groove. Prior to this discovery,most cancer drugs have targeted the major groove in DNA leading to thesuccessful introduction of several new classes of anti-cancer drugs, includingtopoisomerase inhibitors such as camptothecins and anthracyclines.

But as SMi co-founder Dr. Daniel Von Hoff points out, thisnovel mechanism of action has not been without its own unique problem, such asbone marrow suppression that prevented the drug from being given for longcycles. Von Hoff, who is currently a division director at the TranslationalGenomics Research Institute (TGen), and is expected to head CTI's strategicproduct portfolio committee, stresses the important advance Brostallicinrepresents by having this limiting problem "bred out of it." To date, the drughas demonstrated proven anti-tumor activity in soft cell sarcoma and willlikely be tested against non-small cell lung cancer and ovarian andhead-and-neck tumors, Von Hoff adds. The drug has shown a favorable safetyprofile in more than 200 patients treated to date in clinical trials.Brostallicin is currently in Phase II clinical studies under the auspices ofthe European Organization for Research and Treatment of Cancer. Von Hoff alsonotes the importance of the first minor groove binder having now been approvedby the EMEA, the so-called European FDA.

Fromthe standpoint of the compatibility Williamson and Singer determined early-on,Singer expands on the issue by noting that CTI has infrastructure SMi canleverage and SMi, through TGen, has extensive genomic platform andhigh-throughput capabilities to target a cancer drug's'context-of-vulnerability', guiding clinical trials toward patient populationswhere the highest likelihood of success should be observed, with the goal oflowering risk and shortening time to market.
 

Lloyd Dunlap

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