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Jun 30, 2009

BioSante to Take Over Cell Genesys in a $38M All-Stock Deal

  • BioSante Pharmaceuticals is merging with Cell Genesys in an all-stock transaction valued at about $38 million. The deal will end Cell Genesys’ search for alternatives for the company, which began after its cancer immunotherapy failed in late-stage development and Takeda pulled out as partner for the program.

    The combined firm will focus primarily on LibiGel, BioSante’s testosterone gel in Phase III development for the treatment of female sexual dysfunction (FSD). “This merger allows BioSante to secure additional funding required for the continued Phase III development of LibiGel for FSD,” says Stephen M. Simes, BioSante’s president and CEO. As of June 23, Cell Genesys’ cash balance was approximately $36 million and BioSante’s was roughly $6.2 million.

    The combined company will also evaluate development opportunities for GVAX immunotherapies, including potential combination with BioVant™, BioSante’s vaccine adjuvant, as well as possible external collaborations. Additionally, the company will outlicense other Cell Genesys technologies.

    Cell Genesys stockholders will exchange each share they own for 0.1615 of a BioSante share. Based on the companies’ closing stock prices on June 29, this represents $0.347 per share and a 12% premium on Cell Genesys’ closing price. Upon completion of the transaction, which is expected by the end of the year, BioSante is expected to own approximately 60.4% of the combined company.

    In addition, the merged company will acquire a 16% equity ownership position in Ceregene, a former subsidiary of Cell Genesys, which is developing gene therapies for neurodegenerative disorders.

    GVAX cancer immunotherapies comprise whole tumor cells that have been modified to secrete GM-CSF (granulocyte-macrophage colony-stimulating factor), an immune stimulatory cytokine, and then irradiated for safety. Although Phase III trials in prostate cancer were discontinued in 2008, Phase II studies under physician investigator sponsored-INDs are ongoing at the Sidney Kimmel Cancer Center at Johns Hopkins Hospital in pancreatic cancer, leukemia, and breast cancer.

    In August 2008, Cell Genesys reported more deaths in the GVAX treatment arm of a Phase III study in prostate cancer compared to those getting Taxotere plus prednisone. Subsequent analysis of another late-stage trial found that it wouldn’t meet its primary endpoint, and that evaluation was also cancelled. The company lost close to 90% of its value on the stock market since these findings as well as its development and commercialization partner, Takeda. The firm backed out in December 2008, just six months after it paid $50 million up front for exclusive, worldwide rights to GVAX in prostate cancer. As part of the deal, Takeda was financially responsible for further development.

     



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