Cresence DealHere are some intial thoughts about the acquisition of this technology from Cresence AS of Norway.
- I question whether any drug acquired from Cresence will actually go into clinical trials. The purpose of the acquisition appears to be to make xB3 versions of the acquired EGF assets. This would result in a New Chemical Entities requiring substantal preclinical work and IND approval before clinical trials could begin.
- The existing preclincal work, IND status and clinical work relating to the EGF assets allow Bioasis to call itself a clinical-stage company. There is some value in that even if the EGF assets, as purchased, may not be advanced in clinical trials.
- The preclinical and IND work that has been completed, as stated in the PR, should allow Bioasis to more rapidly advance to an IND application and clinical trials for xB3-EGF drugs. But this data and documentation from Cresence would not suffice for IND submissions for xB3-EGF drugs but they should substantially help Bioasis prepare for xB3-EGF drug IND submissions and clinical approvals.
- Milestone payments are conditioned upon, quote, "initiation of a pivotal clinical trial in the U.S. for the first product and 3.0 million shares are issuable to the Sellers upon the U.S. FDA approval of any Bioasis application for the first product." I wouldn't expect milestone payments for any drugs other than for xB3 versions of the drugs.
- The Cresence quote from the PR indicates that it's all about delivery of EGF drugs to the CNS with xB3, with no mention of clinical work with the EGF assets, as purchased.
- Bioasis appears to be presenting the EGF assets as ready for further clinical trial advancement but that is not the same as stating that the assets, without xB3, will be moved forward in clinical trials. Again, I believe that only xB3 versions will be moved forward and that likely means substantial preclinical work will be required to get there. Then come IND submissions.
- The is no mention of clinical assets on the Cresence website. All of the Cresence assets are listed as preclinical. It seems evident that any clinical work done with these assets was done long ago. It looks like Cresence subsequently took them over and has done little other than this Bioasis deal.
- The 6.5 million share up front payment does not represent a control position. A control position, I believe, would be anything greater than 10% of outstanding shares after the deal, which with the Cresence shares would be 7.91 + 0.65 or 8.56 million shares (using the Stockhouse record of outstanding shares). At 6.5 million shares, this comes in lowere than the 8.56 million share contro threshold.
So. to me, it seems that Bioasis has new payloads of value to deliver with xB3, and can call itself a clinical stage company even if the acquired non-xB3 EGF assets, as purchased, will never be taken to the clinic.
It should be noted that xB3-001's
payload of trastuzumab (Herceptin) is also an advanced drug, approved long ago, and it still requires substantial preclinical work before human clinical trials with xB3-001 can be approved and begun. I can't see why it would be any different with these EGF assets.
The EGF assets do allow Bioasis to pursue approaches to the named indications, including neuroinflammation, that seem to surpass approaches using only xB3-IL1-Ra (xB3-004). It will be interesting to see how Bioasis positions xB3-EGF and xB3-001 with respect to each other and multiple sclerosis.
So, in the end, Bioasis has new payload assets to develop.with xB3. What's the big deal? Bioasis can now call itself a clinical stage company, a term that can't hurt in any M&A discussions via Ladenburg Thalmann, equity postions in Bioasis by pharma, licensing deals and any other business development deals.
jd