BURNABY, BC, Feb. 2 /PRNewswire-FirstCall/ - Chromos Molecular Systems Inc. announced that it has acquired Targeted Molecules Corporation (TMC), a privately held biotechnology company based in San Diego, CA. With the acquisition, Chromos gains two antibody product candidates for treatment of multiple sclerosis (MS) and acute thrombosis. Concurrent with the acquisition, Chromos completed a Cdn. $6 million financing, the funds from which will be used to finance operations.
"With the completion of the acquisition, a number of exciting opportunities open up for Chromos," said Alistair Duncan, President and CEO of Chromos. "In addition to securing financing, we have acquired therapeutic product candidates that address significant markets in inflammation and acute thrombosis. This acquisition places Chromos on the path to clinical product development."
Chromos plans to advance development of two humanized monoclonal antibodies, CHR-1103 and CHR-1201. Initially, Chromos proposes to focus its development efforts on the use of CHR-1103 for the treatment of acute relapse in MS, also known as MS flares. Having achieved proof-of-concept in preclinical studies, CHR-1103 is currently undergoing preclinical safety and toxicology studies. The Company expects to file an IND for CHR-1103 and to start a Phase I clinical trial for the treatment of MS flares in patients with relapsing-remitting MS in early 2007. CHR-1103 has also been shown in preclinical proof-of-concept studies to be promising as a treatment for inflammatory bowel disease and rheumatoid arthritis.
CHR-1201 is an anti-thrombotic monoclonal antibody that has been shown in preclinical studies to dissolve blood clots without risk of bleeding. Most existing drugs are not used in patients with acute thrombosis involving the brain due to a high risk of bleeding. Chromos believes CHR-1201 has the potential to treat a significant unmet medical need. The primary focus is neuro-thrombosis, ischemic stroke and traumatic brain injury. CHR-1201 has achieved proof-of-concept in preclinical studies. The Company plans to file an IND for CHR-1201 in the second half of 2007.
In connection with the acquisition Chromos acquired all of the outstanding shares and debt of TMC in consideration for the issuance of 23,647,179 common shares of Chromos, plus nominal cash consideration. An additional 181,083 common shares of Chromos may be issued subject to final adjustment.
Concurrently with the acquisition, Chromos completed a private placement financing and raised Cdn. $6 million consisting of units of Chromos at a subscription price of Cdn. $0.20 per unit. Each unit consists of one Chromos common share and one share purchase warrant to acquire an additional common share. Each warrant is exercisable for two years from the date of issuance at an exercise price of Cdn.$0.25 per share. A total of 30,051,452 million common shares and 30,051,452 warrants were issued under the private placement.
Bridge Loan Conversion
Also, in connection with the acquisition, the previously received bridge loans made to Chromos and TMC by certain financiers in the aggregate amount of Cdn. $2 million were converted to units of Chromos at a subscription price of Cdn. $0.175 per unit. Each unit consists of one Chromos common share and 1.5 Chromos common share purchase warrants. Each warrant is exercisable for two years from the date of issuance at an exercise price of Cdn. $0.25 per share. A total of 11,428,572 million common shares and 17,142,860 warrants were issued in connection with the loan conversions.
After giving effect to the closing of the acquisition, the financing and the conversion of the bridge loans, the Company now has 88,708,179 common shares outstanding.
If all of the warrants issued in connection with the transactions are exercised, Chromos will receive approximately Cdn. $11.8 million in exercise proceeds and would issue an additional 47,194,312 common shares.
The Company's business strategy is to continue to generate revenue (Q3-05 Cdn. $2.9 million compared to Q3-04 Cdn. $0.4 million) from licensing its proprietary ACE System for cell line engineering and REM technology for cell therapy to support its product development programs over the longer term. By combining the technological advantages of the ACE System with Chromos' expertise in making and working with cell lines that express monocloncal antibodies, the Company expects to accelerate the path of its product candidates into the clinic.
Chromos also announces that, Dr. James Miller, formerly a director with TMC, has been appointed to the Chromos Board of Directors. Dr. J. David Sakura has resigned from the Board. The Chromos management team remains in place, and all operations continue to be carried out in the Company's facility in Burnaby, BC.
Risks and Uncertainties
Certain of the statements contained in this press release are forward- looking statements, including without limitation statements relating to the filing of IND's, the commencement of clinical trials, and further revenue generation from the ACE system. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Chromos 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 undertake and complete clinical trials; (v) favourable results from clinical trials; (vi) the ability to complete and maintain corporate alliances relating to the development and commercialization of the Company's technology; (vii) the ability to obtain and enforce patent and other intellectual property protection for the Company's technology; (viii) market acceptance of the Company's technology; (ix) the competitive environment and impact of technological change; (x) the Company's ability to attract and retain employees to carry out its business plans and (xi) 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.
FOR FURTHER INFORMATION:
Kathryn Hayashi, CA
Vice President Finance
Tel: 604 415 7132
Joseph Zendegui, Ph.D.
Vice President, Corporate Development
Chromos Molecular Systems Inc.