BioWorld International Correspondent

LONDON - Oxford BioMedica plc is acquiring its fellow immunotherapy specialist Oxxon Therapeutics Ltd. in an all-paper deal that values Oxxon at £12 million (US$23.3 million). In addition to six clinical stage products, the deal brings Oxford BioMedica £3 million in cash.

Alan Kingsman, Oxford CEO, said he is particularly interested in Oxxon's lead product, a melanoma vaccine, Hi-8 MEL, which is in Phase II. "The acquisition will be neutral in terms of cash burn. The £3 million we get through the transaction is enough to cover the costs of getting the melanoma product through to Phase III and out-licensing," he told BioWorld International.

Oxford BioMedica is issuing almost 31 million shares for the entire share capital and in repayment of a loan from Oxxon's shareholders to the company. This is based on an average closing price of £.5036 over the month preceding the deal. Almost 26 million of the shares will be subject to a lock-up for six months, after which there will be an orderly disposal managed by Oxford BioMedica's brokers.

Oxxon's main shareholders are the UK venture capital firms Quester and MVM Life Science Partners, and East Hill Management of the U.S. They most recently invested in a £15 million round in April 2003. The company was spun out of Oxford University in 1999, and raised £1.1 million in its first round funding in May 2000.

Oxxon's products use sequential immunization with two different vectors - a DNA plasmid followed by modified vaccinia Ankara - carrying the genes for the same antigens. The two-stage regimen called PrimeBoost, primes the immune system to recognize the target and then boosts the immune response, generating cytotoxic T lymphocytes.

Hi-8 MEL for the treatment of advanced melanoma encodes seven epitopes derived from five melanoma antigens. The product has completed a Phase II dose-selection study in 41 patients with nonresectable melanoma. It was well-tolerated at all doses and immune responses were seen in 91 percent of patients receiving the highest dose. Eight patients showed tumor responses for more than six months. All but one of the tumor responses had associated immune responses.

After 24 months follow-up, median survival was 100 weeks for immune responders, vs. 37 weeks for non-responders and 42 weeks for a group of control patients that received standard therapy.

Apart from the melanoma vaccine, the company has a Hepatitis B and an HIV therapy based on the technology, in Phase II. Oxxon also has full rights to three further prophylactic vaccines in Phase II that are being developed by academic collaborators. Two of these, against HIV and malaria, have charitable funding. The HIV vaccine is supported by the International AIDS vaccine initiative, while the malaria vaccine, based on an alternative prime boost strategy, was supported by the Malaria Vaccine Initiative until January 2006. The third is a vaccine against tuberculosis.

Although it already had clinical stage programs at the point it was spun out of Oxford University, Oxxon has worked hard progressing them. Kingsman said there is nothing wrong with the PrimeBoost technology. "It's not a problem with the science, it's a problem with the way they have done business development. Having come to the end of their ability to raise money doesn't mean there aren't some nuggets in there."

Kingsman has spent the last 18 months in negotiations over the licensing of Oxford BioMedica's lead product, the cancer immunotherapeutic TroVax, and said he is close to a deal that will unlock the potential of cancer vaccines in general.

"We've never had any difficulty getting attention from pharma, and there is an almost universal enthusiasm for the concept of TroVax. But cancer vaccines have had a checkered history. We think we've now got over that hump." Licensing TroVax will pave the way to a deal on the melanoma vaccine.

Kingsman said it is planned to review the other programs separately. Oxxon's two facilities in Oxford, UK, and Boston will be closed, and key research staff will transfer to Oxford BioMedica.