The board of cancer drugs specialist ChemGenex Pharmaceuticals is recommending its shareholders accept Cephalon’s $163 million offer to acquire the majority holding in the firm that it doesn’t already own. The deal, which ChemGenex directors are recommending in the absence of a better offer, would hand Cephalon the Australian firm’s NDA-ready chronic myeloid leukemia (CML) candidate Omapro™ (omacetaxine mepesuccinate) and a second, Phase II-stage anticancer candidate.
Cephalon already holds Aus$15 million in ChemGenex convertible notes and has share purchase option agreements in place with two of ChemGenex’ major shareholders. In combination these give the U.S. firm a starting 27.57% stake in ChemGenex. The $163 million extra that Cephalon is willing to shell out will buy the remaining shares and options. Cephalon says the deal values all ChemGenex shares and options at about $231 million. The offer comes just a week after Cephalon inked a $225 million cash deal to take over cancer drugs firm Gemin X.
“The ChemGenex Board welcomes Cephalon’s bid, which represents an attractive premium to the current and recent trading prices of ChemGenex shares,” notes Brett Heading, chairman of ChemGenex. “In the absence of a superior offer, the board will unanimously recommend that ChemGenex shareholders accept the offer and realize value for their shares.”
“The proposed transaction allows ChemGenex shareholders to realize cash proceeds at a significant premium to recent trading levels and adds an interesting late-stage opportunity to our portfolio,” adds Kevin Buchi, Cephalon CEO.
ChemGenex’ blood cancer therapy candidate Omapro is scheduled for NDA submission to FDA later this year as a treatment for CML. Phase II studies evaluating omacetaxine against myelodysplastic syndrome and acute myelogenous leukemia are also ongoing.
ChemGenex has teamed up with Hospira to develop and commercialize omacetaxine in Europe, the Middle East, and parts of Africa. The firm had planned to hold on to the drug for the North American market, but was looking to establish commercial partnerships in the rest of the world.
ChemGenex’ second clinical-stage candidate is the EGFR pathway-targeting cancer drug Quinamed® (amonafide dihydrochloride). The development strategy for Quinamed involves evaluating individual patients’ NAT2 genotype as a basis for determining dose levels. The firm has completed a Phase IIa study with prospective dosing based on NAT2 genotype in patients with refractory prostate, ovarian, or breast cancers who had failed prior chemotherapy.
In January ChemGenex announced a decision to align its European regulatory filing plans for omacetaxine with its U.S.-based strategy. As a result the firm withdrew its already-submitted Marketing Authorization with the European Medicines Agency (EMA) for the use of omacetaxine in CML patients who had failed imatinib therapy and who carry the T315I mutation. Instead, ChemGenex informed EMA that it would submit a new MAA for CML patients who have failed therapy with two or more tyrosine kinase inhibitors (TKIs). This submission is planned for the second half 2011, in parallel with the scheduled FDA filing for the drug.
The new MAA will use combined data from ChemGenex’s two pivotal studies, CGX-CML-202 and CGX-CML-203, which were designed to evaluate the safety and efficacy of subcutaneously administered omacetaxine in patients who had either failed imatinib and carried the T315I mutation or who were resistant or intolerant to two or more TKIs. ChemGenex will also submit this combined data in its NDA to FDA.
The nuts and bolts of Cephalon’s takeover bid comprise an offer of Aus$0.70 cash for each ChemGenex Share, and A$0.02 cash for each ASX-listed ChemGenex Option. The offer price of Aus$0.70 per ChemGenex Share represents a 59% premium to the last traded price of ChemGenex Shares and a 40% premium to the Aus$0.50 conversion price of the convertible notes issued to Cephalon and approved by the ChemGenex shareholders last year.