Offer will be publicly launched in December and would pull BioXell out of troubled waters.

BioXell’s board of directors has unanimously embraced a CHF 41.3 million (about $40.9 million) cash, shares, and options-based offer for the company by Cosmo Pharmaceuticals. Cosmo intends to launch the offer in December.

The proposed deal includes CHF 15.1 million, or approximately $14.93 million, in cash, and values BioXell’s shares at 17.1% over their volume-weighted average over the last 60 days. Index Ventures and TVM Capital, which own a combined 19.7% stake in BioXell, have already said that they will tender their shares when the offer goes public as long as a more attractive offer isn’t thrown into the ring. 

BioXell was founded as a spin-out from Roche in 2002. Things started going seriously wrong for the company in April this year when lead vitamin D3-derived therapeutic candidate, Elocalcitol, bombed in Phase IIb trials in patients with overactive bladder.

The failure led the company to drop ongoing clinical development of the product in all indications including benign prostatic hyperplasia. A Phase II trial of Elocalcitol in patients with male infertility had previously been suspended, and a Phase I trial with the vitamin D3 analogue, BXL746, was also put on hold.

In addition to ceasing its VD3-derived product development, BioXell also stopped research activities with its TREM (triggering receptors expressed on myeloid cells) technology. In 2005, BioXell signed a potentially $150 million deal with Merck & Co. focused on the development of TREM-related therapeutic and diagnostic products.

As a result, BioXell’s active pipeline currently comprises an in-licensed mAb targeting TrkA called BXL1H5 for the treatment of chronic pain. IND filing had been earmarked for the first half of 2011.

In its interim report for the first six months of this year, the company’s CEO, Niels Ackermann, stated, “we are convinced that BioXell’s vitamin D3 analogues including Elocalcitol in benign prostatic hyperplasia, BXL746 for the prevention of postsurgical adhesions, and the substantial vitamin D3 library as well as BioXell’s proprietary technology associated with TREM-1, an important mediator of inflammatory responses, remain valuable assets with therapeutic and clinical potential.”

As of June 30, BioXell had assets of €39.3 million (roughly $58.74 million), including €1.9 million (about $2.84 million) in cash and €33.3 million (about $49.78 million) in investment securities.

“The proposed offer returns to shareholders a significant portion of BioXell’s cash while also giving them an opportunity to participate in the development of a profitable specialty pharmaceutical company at full down-side protection,” remarks Thomas Szucs, M.D., chairman of BioXell’s board of directors.

Cosmo is focused on developing products for the treatment of serious gastrointestinal disorders. The company is exploiting its Multi Matrix MMX® technology, developed to deliver APIs directly into and along the full length of the colon. Cosmo’s lead product, Lialda™, was launched in the U.S. by Shire Pharmaceuticals in 2007.

The current Cosmo pipleline includes Budesonide MMX and Rifamycin SV MMX, which are both in Phase III development, as well as LMW Heparin MMX, which is in Phase II. In December 2008, Cosmo signed a deal with Santarus for exclusive rights to develop and commercialize Budesonide MMX and Rifamycin SV MMX in the U.S.

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