Company will focus on vaccine technology and partner the remaining cancer programs.

Paladin Labs has bought ViRexx Medical for its discovery platform and developmental-stage pipeline. Paladin paid $1.25 million to existing ViRexx creditors, and former ViRexx shareholders could receive up to $2.5 million if certain conditions are met before December 31, 2009.

ViRexx has three platforms: Chimigen™ Vaccine, T-ACT™, and AIT™. Paladin reports that it will advance products from Chimigen but will try to partner the T-ACT and AIT programs.

“ViRexx spent over $30 million in developing its promising, innovative technology,” according to Jonathan Ross Goodman, president and CEO. “Unfortunately, ViRexx got caught in this financial storm without the protection of cash.

“We believe that our focused investment in Chimigen over the next 18 months may reward our shareholders through a lucrative partnering agreement,” Goodman states. Paladin will spend approximately $2–$2.5 million on R&D in 2009 on the Chimigen platform and partnering activities. In addition, Paladin’s noncapital losses and investment tax credits available to offset future taxable income has increased by a minimum of $28 million.

Chimigen is being used primarily to generate vaccines for hepatitis B and C, with a hep B candidate past Phase I. Paladin will develop a next-generation Chimigen hepatitis B vaccine and expects to complete a Phase I study in 2010.

The T-ACT technology is designed to interrupt blood supply to tumors. The lead product from this platform is Occlusin™ 50 injection, which has completed a Phase I trial in hepatocellular carcinoma. Occulsin 500 AED is an embolic agent designed to treat hypervascular tumors.

The lead product candidates for AIT include OvaRex® mAb for ovarian cancer and BrevaRex® mAb for breast cancer. OvaRex was subject to one Phase II study examining combination chemo-immunotherapy in front-line treatment and two Phase III trials examining immunotherapy during remission. BrevaRex was shown to be safe in a Phase I trial in patients with MUC-1 expressing tumors.

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