BioTime Acquires Asterias in Bid to Become Leading Cell Therapy Company

Shares of Asterias Biotherapeutics have soared nearly 30 percent in premarket trading after it was announced that the Fremont, Calif.-based company was being absorbed by BioTime, Inc. in an attempt to create a leading cell therapy company.

With the merger agreement, BioTime acquired two clinical-stage cell therapy product candidates that have the potential to address unmet needs in spinal cord injury and immuno-oncology. OPC1 is a Phase II cellular therapy utilizing oligodendrocyte progenitor cells that has demonstrated potentially reparative functions that could address complex pathologies observed in demyelination disorders such as spinal cord injury and multiple neurodegenerative diseases. Those neurodegenerative diseases could include multiple sclerosis and white matter stroke. Asterias is currently completing a Phase I/IIa clinical trial for severe spinal cord injury where there currently are no approved therapies.

Additionally, BioTime will gain VAC2, a non-patient-specific, or allogeneic, cancer immunotherapy candidate. VAC2 cells are engineered to express a protein widely expressed in tumor cells but rarely found in normal cells. The VAC2 antigen-presenting dendritic cells instruct the immune system to generate responses against tumor cells, BioTime said. VAC2 currently is being investigated in a Phase I study for the treatment of non-small cell lung cancer that is being conducted by Cancer Research UK.

Brian M. Culley, BioTime’s chief executive officer, said the acquisition of Asterias is part of the vision to build BioTime into a “premier cell therapy company.” The deal diversifies the company’s existing pipeline with the two Asterias products. Additionally, Culley said the acquisition of Asterias adds partnerships with institutions like the California Institute for Regenerative Medicine and Cancer Research UK. VAC2 has the potential to be applied to other solid and liquid tumors and to deliver additional or different antigens depending on the cancer type, Asterias said.

“We believe this merger is an exciting opportunity for BioTime’s shareholders to benefit from the potential future value of a more differentiated pipeline as well as the opportunity to impact disease areas that are in desperate need of innovative therapeutic approaches,” Culley said in a statement.

Under terms of the deal, Asterias stockholders will receive .71 common share of BioTime for each share of Asterias common stock. It is projected that Asterias stockholders will own approximately 16.2 percent of the combined company. The deal is expected to be finalized in 2019.

Michael Mulroy, CEO of Asterias, said the merger with BioTime will create substantial value for the company’s stockholders, employees and its clinical programs.

“The stock merger structure provides Asterias stockholders the ability to continue their investment in our clinical programs in spinal cord injury and non-small cell lung cancer as part of a larger, more diversified company with greater resources.”

Shares of Asterias jumped to $1.32 in early trading. The stock closed at $1.06 on Wednesday. Shares of BioTime have fallen more than 4 percent to $2.10 in premarket trading, down from the closing price of $2.10.