Upstream Biosciences Inc. completed its acquisition of Pacific Pharma Technologies Inc., a company developing drugs against tropical parasitic diseases in humans and animals.

Upstream and Pacific Pharma, both of Vancouver, British Columbia, already had been a relationship, as the Upstream CEO helped form Pacific Pharma in 2005.

Upstream issued about 520,000 shares in the deal, which were worth about $244,000 based on Upstream's closing price on Friday. Its shares (OTC BB:UPBS) closed unchanged Monday at 47 cents.

Pacific Pharma uses artificial intelligence, computational methods and chemical diversity techniques to discover new drugs. That technology was developed by Artem Cherkasov, a faculty member in the Department of Infectious Diseases at the University of British Columbia. He already was a member of Upstream's scientific advisory board.

"We are very excited about this deal," said Joel Bellenson, CEO of Upstream, a virtual company focused on cancer genetic markers for use in diagnosis and assessing drug response. "This is something I initiated with Dr. Cherkasov a few years ago, and am very happy he put it into Upstream rather than develop it as a separate company."

Upstream was founded in 2004 and gained a public listing in March 2006 through a reverse merger with a failed marketing services company. It has about 47 million shares outstanding, meaning Pacific Pharma initially gained a stake of only 1.1 percent. Upstream could issue up to 225,000 additional shares if certain milestones are met.

Bellenson told BioWorld Today the acquisition provides Upstream with complementary computational technologies, as well as compounds that have demonstrated encouraging in vitro results against parasitic diseases.

Pacific Pharma's lead compounds have demonstrated in vitro encouraging signs of efficacy against leishmaniasis and African sleeping sickness (trypanosomiasis), parasites that belong to a family of protozoa species that includes Chagas disease and malaria, Upstream said. The diseases affect millions of people in the developing world.

"We are very excited about this opportunity to pursue drugs that address diseases that have been overlooked, with huge potential," Bellenson said. "It's a largely untapped situation with very limited competition. This gives us the opportunity to form partnerships with various governments" and others, for help in clinic trials and other development efforts. Discussions with governments already are under way, he said.

The company also will be interested in obtaining grants to move the programs forward, Bellenson said. And he said the company will pursue veterinary applications of the technology, which represents a large opportunity and also an easier path to commercialization. Bellenson said African sleeping sickness in cattle, goats, sheep and other animals is one of the principal causes of malnutrition in Africa.

Bellenson said compounds generated through the Pacific Pharma technology have shown activity in other areas, too, such as cancer-related targets, a nice overlap for the Upstream programs. In addition to the lead parasitic indications, Upstream intends to begin screening compounds against malaria and tuberculosis.

The Pacific Pharma platform takes existing compounds that have demonstrated efficacy against a target disease and uses artificial intelligence, computer simulation and pattern recognition techniques to identify key structural elements associated with their efficacy, Upstream said. Screening analyses and diversity generation chemistry are then applied to produce potential drug candidates. The technology also can be used to identify novel applications for existing drugs.

"This technology is particularly applicable to these difficult-to-treat protozoan diseases because it does not require knowing the disease target a priori," Cherkasov said in a news release. "By combining state-of-the-art computational approaches with advanced chemistries, we have already demonstrated that we can successfully produce novel compounds with good drug-like properties and the potential for enhanced efficacy and reduced toxicity."

Upstream reported having nearly $1.9 million in cash as of June 30, about what it raised earlier this year. At the time, it said that would last more than a year.

Bellenson said Upstream intends to raise additional money in the near term, enabling it to continue to push its new drugs forward in various in vitro and toxicological testing, while also continuing studies in its genetic markers program, which focuses on liver, prostate, ovarian and thyroid cancers.