BURNABY, BC, Nov. 3 /PRNewswire-FirstCall/ - Chromos Molecular Systems Inc. ("Chromos") (TSX:CHR - News) announced today that it has entered into a definitive agreement under which it will acquire Targeted Molecules Corporation ("TMC"), a privately held San Diego based biotechnology company focused on the research and development of two antibody product candidates for treatment of multiple sclerosis (MS) and acute thrombosis. Concurrently with the acquisition Chromos will complete a private placement to raise not less than $6.0 million, the proceeds of which will be used to finance operations.
"The TMC biopharmaceutical product candidates we acquire, coupled to the financing that results from this transaction, places Chromos on the path to clinical product development. These monoclonal antibodies, which address significant markets in inflammation and acute thrombosis, expand our opportunities to bring new therapies into the clinic," said Alistair Duncan, who will lead the combined company as President and CEO. "In addition, by combining the technology advantages of our ACE System with our expertise in making and working with cell lines that express monoclonal antibodies, we will be able to accelerate the path of these candidates into the clinic."
"We also anticipate the increased revenues from licensing our platform technologies, in particular our cell line engineering business, will provide additional financial support for our product development programs over the longer term," said Duncan. For the six months ended June 30, 2005, Chromos earned revenues of $2.1 million through its cell line engineering business compared to $0.2 million for the six months ended June 30, 2004. Chromos expects its cell line engineering business could be profitable within two years.
As a result of the acquisition, Chromos will gain two proprietary humanized monoclonal antibody product candidates, TMC-2003 for inflammatory diseases and NHAT for acute thrombosis. TMC has demonstrated efficacy of these candidates in preclinical proof of principle studies.
TMC-2003 (to be re-designated CHR-1103) is a humanized monoclonal antibody directed to VLA-2, an integrin involved in maintenance of inflammation. In preclinical studies, TMC has demonstrated that anti-VLA2 therapy reduces inflammation in animal models of multiple sclerosis (MS), inflammatory bowel disease and rheumatoid arthritis. Following the completion of the transaction, Chromos intends to initially focus on development of TMC-2003 for treatment of acute episodes of relapse in relapse-remitting MS patients. Chromos expects to complete preclinical safety and toxicology studies by 2H-2006 and anticipates filing an Investigational New Drug application in Q4-2006, "We believe this product has great potential to fill a significant unmet medical need," said Mr. Duncan. "MS patients are underserved at present, as there is no effective therapy available to reduce the damage done during acute relapse."
NHAT (to be re-designated CHR-1201) is a humanized monoclonal antibody directed to von Willebrand's Factor designed for treatment of acute thrombosis. NHAT is designed to selectively inhibit thrombosis (blood clots) without increasing the risk of bleeding by inhibiting the interaction between the growing thrombus and platelets; thus preventing full vessel blockage. NHAT does not increase bleeding because its target plays no significant role in platelet recruitment, aggregation and stabilization normal blood vessel repair. TMC has targeted the large unmet clinical need in neuro-thrombotic disorders as the primary indication for its NHAT antibody. Chromos intends to continue this path and initiate clinical development as soon as resources allow. "We believe NHAT has great potential for treatment of acute thrombosis, especially treatment of acute thrombosis involving the brain," said Mr. Duncan. "There is a large unmet need in this area since many of these patients are not treated due to the high risk of hemorrhage with existing agents."
Terms of the Merger Agreement
Under the terms of the proposed acquisition, Chromos will acquire all of the outstanding shares of TMC in consideration for $0.0284 per TMC common share. The total cash consideration issuable to the TMC shareholders in connection with the merger is approximately $740,000. It is anticipated that the majority of the cash consideration received by TMC shareholders will be re-cycled into subscriptions for Chromos common shares at a subscription price of $0.20 per Chromos common share. In connection with the merger, Chromos will also purchase certain outstanding debt of TMC in consideration for the issuance of additional common shares and warrants of Chromos.
As a pre-condition of the merger, Chromos will complete a private placement financing to raise additional funding in an aggregate minimum amount of $6 million and a maximum of $10 million by issuing units of Chromos at a subscription price of $0.20 per unit. Each unit will consist of one Chromos common share and one Chromos common share purchase warrant convertible for two years from the date of issuance at an exercise price of $0.25 per share.
The result of this merger, taken together with the financing, is that new investors and existing Chromos shareholders will own approximately 63% of the merged company and existing TMC shareholders will own approximately 29%. Upon consummation of the transaction, Dr. James Miller, a director of TMC, will be appointed to the Chromos Board of Directors and Dr. Sakura, a current director of Chromos, has advised that he will resign. The Chromos management team will remain and all operations will be carried out in Chromos' facility in Burnaby, BC.
Closing of the acquisition is conditional upon customary and other conditions, including Chromos raising not less than $6 million under the private placement, converting the outstanding bridge loans in accordance with their terms, the approval of the transaction by the TSX and the shareholders of Chromos and TMC. The transaction cannot close until the required approvals are obtained and other conditions fulfilled. Shareholders of Chromos will be asked to approve the transaction at a special shareholders meeting to be held on November 23, 2005.
If approved, the transaction is expected to close shortly thereafter. For more complete information, investors should refer to the Management Information Circular which will be delivered to shareholders in connection with the special meeting and will be filed on SEDAR.
Chromos is a cellular engineering and therapeutics company creating value through engineering production quality cell lines for the manufacture of biopharmaceuticals, and the development of innovative biological therapies for debilitating diseases. Chromos has exclusive worldwide rights to two platform technologies, the ACE System (Artificial Chromosome Expression) and REM (Rapid Expansion Method) technology. In the near term, Chromos will focus on continued commercialization of the ACE System for engineering cell lines. To date Chromos has entered into corporate partnerships with partners including Pfizer Inc., Centocor, Inc., BD (Becton, Dickinson and Company) and Cambridge Antibody Technology. In addition, the Company has strategic alliances with AppTec Laboratory Services, Inc., a leading biopharmaceutical contract manufacturer and with SAFC Biosciences, a member of the Sigma-Aldrich Group providing cell culture media development services to biopharmaceutical customers.
Risks and Uncertainties
Certain of the statements contained in this press release are forward- looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Chromos (the "Company"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. To the extent possible, management implements strategies to reduce or mitigate the risks and uncertainties associated with the Company's operations. Operating risks include (i) the continued availability of capital to finance the Company's activities; (ii) the Company's limited cash position, (iii) the ability to successfully obtain proof of the effectiveness of the Company's technology (iv) the ability to complete and maintain corporate alliances relating to the development and commercialization of the Company's technology; (v) the ability to obtain and enforce patent and other intellectual property protection for the Company's technology; (vi) market acceptance of the Company's technology; (vii) the competitive environment and impact of technological change; (viii) the Company's ability to attract and retain employees to carry out its business plans and (ix) the timely development and commercialization of any technology or products that are contingent on the completion and maintenance of corporate alliances with third parties. Further details on Chromos' operating risks can be found in the Company's Quarterly and Annual Reports to Shareholders.
The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer of any of the securities described herein in any jurisdiction.
CONTACT: Kathryn Hayashi, CA, Vice President Finance, (604) 415-7132, email: firstname.lastname@example.org