BioWorld International Correspondent

MerLion Pharmaceuticals Pte. Ltd. gained two new antibiotics that are about to enter the clinic, plus a platform for identifying novel anti-virulence molecules through its stock acquisition of Berlin-based Combinature Biopharm AG and Athelas SA, of Geneva.

The Singapore-based company also banked $25 million, which represents the first closing of a $30 million venture capital round led by Aravis Venture Associates AG, of Zurich, Switzerland, and Bio*One Capital Pte. Ltd., of Singapore.

The second closing is due to be completed before year's end, and the enlarged entity is aiming for an initial public offering in Japan by late 2007 or early 2008, CEO Tony Buss told BioWorld International.

Combinature's CEO Harald Labischinski becomes chief scientific officer of the enlarged entity, and the company's clinical development programs will be run from Germany. Athelas' Geneva facility is being closed and its screening technology is being relocated to Singapore, which remains the company's headquarters and principal R&D location.

Buss will continue to lead the company, which earlier this year named as its chairman Richard Sykes, the former chairman of London-based GlaxoSmithKline plc and the former CEO of Glaxo Wellcome plc.

MerLion was formed in 2002 through the privatization of the Centre for Natural Product Research (CNPR), a unit of the Institute of Molecular and Cell Biology (IMCB). It has secured natural product screening alliances with several large pharma and biotechnology companies, including Merck & Co. Inc., of Whitehouse Station, N.J.; Schering-Plough Corp., of Kenilworth, N.J.; Abbott Laboratories, of Abbott Park, Ill.; and Astellas Pharma Inc., of Tokyo.

The company has a number of preclinical internal development programs, as well, but was lacking drug development expertise. "We in MerLion had never taken a compound to clinic and were some way off that," Buss said. Growing that capability in Singapore would have been difficult, so about 18 months ago, the company decided to acquire those skills instead.

Combinature, which was founded in 2000 by researchers and managers based at the universities of Freiburg and Tübingen, the Research Institute for Molecular Pharmacology and the German Resource Center for Genome Research, both in Berlin, had raised €22 million during its existence as an independent entity. Prior to becoming its CEO last year, Labischinski had been head of antibiotics and anti-infectives research at Leverkusen, Germany-based Bayer Healthcare AG.

Combinature is supplying the enlarged entity with its two lead molecules, a lipopeptide in development for treating hospital-acquired infections caused by multidrug-resistant bacteria and a second antibiotic that has been in-licensed from an undisclosed large pharmaceutical firm. Both are about to enter Phase I trials. "That, combined together with the very important drug development expertise, drove us to do the deal with the Combinature investors," Buss said.

Combinature also has built a fee-for-service business around a nuclear magnetic resonance screening facility. The future of that organization still is under evaluation. It is cash positive, and it could be spun out or sold off.

Athelas was founded in 2002 by Pierre Cosson and Jean-Pierre Paccaud while at the School of Medicine at the University of Geneva. The company, which had raised just CHF3.5 million (US$2.9 million) in seed funding, is using a unicellular organism as a model system to screen for factors that contribute to bacterial pathogenicity.

Its aim is not to identify new antibiotics but to find novel compounds acting on human targets that interfere with bacterial processes such as growth, colonization or virulence. "The bottom line is every conventional antibiotic will at some stage generate resistance," Buss said.

The compounds identified through the Athelas system would exert less selective pressure on bacterial populations and would be less likely to lead to resistance.

"It's speculative; it's early stage, no question," Buss said. However, Athelas had achieved scientific proof of concept. Two of the lead compounds it identified exhibited efficacy in animal models of infection.

It faced a bottleneck in gaining access to medicinal chemistry resources. "That's really what MerLion is bringing to the Athelas platform," said Jean-Philippe Tripet, managing partner at Aravis.

Aravis also had invested in Athelas, which entered a drug discovery and research collaboration with MerLion in 2003.

MerLion's headcount has climbed from 68 to 90 people, Buss said.

The enlarged entity now has an "integrated R&D machine" that combines chemistry, screening, lead optimization and drug development, Labischinski said, adding that "the combined entity has a unique position."

The other participants in the financing include Nomura Research & Advisory Co. Ltd., of Tokyo; Frankfurt, Germany-based Aurelia Private Equity GmbH; Brandenburg Capital GmbH, of Potsdam, Germany; Singapore-based BioVeda Capital; Basel, Switzerland-based Novartis Venture Fund; Mitsubishi Corp., of Tokyo; and London-based 3i plc.