Active Biotech - new force in biotechnology
Active Biotech is completing the acquisition of the Lund Research Center from Pharmacia & Upjohn ("P&U"). The research portfolio includes projects for pharmaceuticals primarily intended for the treatment of asthma, rheumatism and multiple sclerosis.
* Acquisition financed by a non-cash issue of 2 million B shares in Active Biotech
* As a result of the acquisition, Active Biotech obtains a qualified research organization and a research portfolio with considerable potential
* Commissioned cancer research contract signed with P&U which will provide revenues of approximately SEK 190 M through the year 2000.
* The Board proposes new issues totalling about SEK 500 M to finance continued investment in biotechnology - comprising an issue of approximately SEK 250 M with preferential rights for shareholders and a directed issue of approximately SEK 250 M for Swedish and international institutional investors
* After implementation of these new issues, Active Biotech will have shareholders' equity of about SEK 1.5 billion
The acquisition of the Lund Research Center will deepend and strenghten Active Biotechs, since 1985, investments in immunology. 1996 was Actinova Ltd established and 1997 the company acquired SBL Vaccin AB from the Kingdom of Sweden. The acquisition of the Lund Research Center means that Active Biotech will have access to leading research expertise in immunology. Research at the Lund Research Center includes preclinical projects in the autoimmune (when the body's immune system attacks its own tissue) and inflammatory diseases, and research facilities with a floor space of 25,000 m2. The development and market potential of the acquired projects is considerable.
The Lund Research Center has 165 employees, of whom 145 are researchers. Active Biotech will be receiving approximately SEK 190 M from P&U in the period 1998-2000
for preclinical research in the cancer area and royalties on future sales.
Since the signing of the preliminary agreement in December 1997, Active Biotech's current assessment is the Lund Research Center has the expertise to conduct projects to a greater extent on its own. This strategy gives Active Biotech much greater commercial opportunities, but it also increases capital requirements. As a result, the Board is proposing a larger issue than announced previously.
In order to finance research and development at the Lund Research Center, SBL Vaccin and Actinova during the next three years, the Board intends to decide on two new issues of Active Biotech shares totalling about SEK 500 M, of which approximately SEK 250 M will carry preferential rights for Active Biotech shareholders. The two largest shareholders, Bo Håkansson and P&U, will subscribe to their share of this rights issue. A directed new issue of approximately SEK 250 M will be implemented to increase international and institutional ownership of Active Biotech. The agreement with P&U calls for approval of these new issues by Active Biotech's Annual General Meeting.
D. Carnegie AB has advised Active Biotech on the acquisition of the Lund Research Center. The new issues in Active Biotech will be implemented by D. Carnegie AB and Paribas. D. Carnegie AB will handle the rights issue to shareholders while the new issue for Swedish and international investors will be handled by D. Carnegie AB and Paribas jointly.
Bo Håkansson, Active Biotech's President comments that:
"This acquisition is an important milestone in our investment in biotechnology and supplements well our current operations within SBL Vaccin and Actinova. The broad project portfolio, our team of highly qualified researchers and first-class research facilities give us the best possible opportunities of developing new selective pharmaceuticals for the treatment of inflammatory and autoimmune diseases. The proposed new issues will give us the financial stability required for long-term investment in the development of pharmaceuticals and vaccines."
Göran Ando, Vice President of Pharmacia & Upjohn, comments as follows:
"We are very happy this agreement could be made. The agreement makes good use of the excellent research expertisewithin inflammatory and autoimmune diseases at the Lund Research Center and it makes it possible for us to continue our promising project
within cancer. Pharmacia & Upjohn will continue to retain an interest in research activities in Lund both as a potential marketing partner and through our holding in Active Biotech."
The acquired research projects are presented in more detail in the enclosed background descriptions.
Annual General Meeting will take place on the 16th of April 1998, Malmö Börshus.
Malmö, 9 March 1998
Active Biotech AB
Active Biotech is a biomedical company listed on the Stockholm Stock Exchange. Active Biotech has two subsidiaries in biotechnology: SBL Vaccin and Actinova. SBL is a market leader in the distribution of vaccines in Sweden and undertakes the development, production and marketing of vaccines against polio, cholera and ETEC (tourist diarrhoea). Actinova is a research company involved in developing streptococcal
vaccines, immunotherapies and affinity proteins.
LUND RESEARCH CENTER - BACKGROUND
The Lund Research Center is a modern biotechnology research company with 165 employees with the expertise required to develop pharmaceuticals in fields ranging from
explorative research to the clinical phase. The Center's niche is the development of drugs to deal with inflammatory and immunological diseases. An understanding of the body's immunological processes is achieved by characterizing the elements in the immune system's cellular components, genetic mechanisms and chemical processes and by studying the impact of defects and deviations in the immune system on of cancer and autoimmune diseases.
The Lund Research Center has an excellent reputation in immunological and inflammatory research in Sweden, and has close contacts with the academic world and industry. The Center is part of a network of Swedish university laboratories with close links with the University of Lund. Close contacts with university research laboratories are an important prerequisite for the initiation of development of pharmaceutical products by a biotechnology company. The research portfolio comprises a group of highly interesting substances.
* MULTIPLE SCLEROSIS ß interferons provide the only treatment currently available. These products are registered in the US and Europe. The clinical effects of ß2 interferon treatment have primarily been demonstrated in the early stages of the disease, however. At the moment, there is no effective treatment for chronic multiple sclerosis. The total market is currently estimated to amount to USD 300 million, but is expected to increase substantially in the next few years as new and more effective drugs are launched.
* RHEUMATOID ARTHRITIS
There are several types of pharmaceutical treatments for rheumatoid arthritis on the market, but they primarily focus on alleviating the symptoms. The total European market is currently estimated to amount to USD 750 million. The US rheumatoid arthritis market is worth approximately USD 6.5 billion, with annual growth of 5%.
The market for current asthma products in the US, Japan and the major European countries is estimated to amount to approximately USD 5.3 billion, and is expected to increase to USD 8 billion within five years. Competition is extremely keen, with a number of new and old products representing various approaches to the problems.
* SAIK SUBSTANCES - NEW DRUG FOR MULTIPLE SCLEROSIS
Certain diseases occur when the immune defence system attacks the body's own tissue.
Diseases of this kind, such as multiple sclerosis, require long-term treatment. Since both the disease and the treatment are chronic, avoiding side effects is a crucial factor in the development of appropriate drugs.
P&U has been working for many years on the development of new pharmaceutical for the treatment of multiple sclerosis. The roquinimex preparation has demonstrated
satisfactory clinical effects for the treatment of multiple sclerosis in phase II trials and has achieved positive preliminary clinical results in phase III tests in the US. The phase III tests were discontinued in 1997, however, after serious side effects were noted in a few patients treated with roquinimex.
However, development work on follow-up substances involving chemical reformulation has been conducted since 1994, and potentially serious side effects have been eliminated.
These SAIK substances have a selective impact on the cellular immune defence system in the case of certain autoimmune and inflammatory diseases, without inhibiting the immune system at a more general level.
Satisfactory results have been achieved in preclinical tests of SAIK substances on animal models for multiple sclerosis, and there is also potential in wider clinical areas of application. Substance selection for initial clinical testing is expected to occur during 1999.
* NON-STEROID BASED INHIBITORS FOR INFLAMMATORY REACTIONS
The intergrins are a group of macromolecules facilitating the adhesion of white blood cells to blood vessels and thereby initiating the healing process in inflammed tissues.
This is an important mechanism within chronic and allergic inflammation. The LRC has
developed a new group of substances which selectively affect white blood cells in connection to these diseases. This mechanism of action is expected to provide a more selective and clinically effective treatment of common diseases such as asthma and rheumatoid arthritis. Selection of a Candidate Drug is expected during 1999.
* T CELL ANTAGONISTS - A NEW MODE OF OPERATION IN AUTOIMMUNE DISEASES AND TRANSPLANTS
T cells play an important part in autoimmune diseases such as rheumatism and type I diabetes and in the rejection of transplant organs. An undesirable immune reaction can be blocked by applying selective inhibition to the T cells without simultaneously exerting a general effect on the body's immune defence system, thus reducing the risk of infection in transplant patients, for example. This a major problem at the moment, due to lifelong treatment with the current drugs, which have an indiscriminate effect on the immune system. This project is in the preclinical phase and it is not anticipated that substances can be selected for clinical testing can occur within the next few years.
* CANCER RESEARCH AT THE LUND RESEARCH CENTER
P&U has been undertaking research to identify new immunological modes of operation for the treatment of cancer. This has resulted in the development of new monoclonal antibodies and "superantigens" which are expected to have a selective clinical effect on
certain types of tumours, without the serious general side effects experienced with current cell toxins. The Lund Research Center has developed two substances which are now at the clinical stage. Since these substances have reached the clinical stage, responsibility for clinical development has been transferred to other units in the P&U Group.
The Lund Research Center will, however, continue preclinical development of a third substance on an assignment from P&U with a duration of about three years. Active Biotech will receive research revenues of approximately SEK 190 M for this project in the period 1998-2000.
PRODUCT RIGHTS AND ROYALTIES
Active Biotech has acquired all rights pertaining to the research projects covered by the acquisition (with the exception of cancer research). P&U will receive royalties based on sales of future commercial products in these areas.
In the case of cancer research, P&U is retaining the rights to TTMA-3. Active Biotech will receive royalties based on sales of a future commercial product.