Washington Editor

SIGA Technologies Inc. and Allergy Therapeutics Holdings Ltd. agreed to a stock-for-stock merger that will combine research and development strengths of each company to lead to quicker advances in drug development.

The merger also means Elan Corp. plc will expand its collaboration with Allergy Therapeutics and license additional vaccine-related technology to the combined company on an exclusive basis.

Upon completion of the deal, shareholders of SIGA, of New York, and Allergy Therapeutics, of Worthing, UK, each will own 47.5 percent of the combined company while Elan, of Dublin, Ireland, will own 5 percent. Other shareholders of Allergy Therapeutics, including GlaxoSmithKline plc and ING Bank, will own public stock in SIGA. Allergy Therapeutics is a private company.

“We’re obviously very excited about the merger,” Iain Ross, chairman and CEO of Allergy Therapeutics, told BioWorld Today. “There are a number of exciting companies in the U.S., but we feel SIGA is the right fit for us. There’s no overlap between the companies and that means we can merge very effectively we are strong in Europe and SIGA is strong in the U.S.”

Meanwhile, in New York, Don Drapkin, chairman of the board for SIGA, told BioWorld Today that the deal is a perfect marriage. “We think their vaccine technology is compatible with ours and we think their management is terrific.”

And regarding Elan, Ross said Allergy Therapeutics has a strategic collaboration using Elan’s Fast Melt technology to develop compounds. “Elan looked at the merger and decided to contribute additional technology that we need. If we combine some of their technology with the work we are doing here in allergy, plus some technology at SIGA, we believe we potentially will have some very interesting oral vaccines.”

Individually, Allergy Therapeutics and SIGA have been working on products that could make a big splash in both the U.S. and Europe.

For its part, Allergy Therapeutics brings to the merger a vaccine for grass and pollen allergies poised for Phase III European trials later this year. Ross said the upcoming trials will consist of four injections at the beginning of the allergy season.

Already, Allergy Therapeutics sells an allergy drug in Europe called Pollinex (registered product) and Pollinex Quattro (available only on a named patient basis).

SIGA, on the other hand, is advancing along its own vaccine for prevention of strep throat. In late January, SIGA released positive results of two Phase I trials of the vaccine. Furthermore, Thomas Konatich, acting CEO and chief financial officer of SIGA, said the company also is working on vaccines for sexually transmitted diseases, and through a subcontract, SIGA is helping the University of Oregon develop a bioterrorism product.

When the merger between SIGA and Allergy Therapeutics is complete, Konatich and Drapkin agree, the first order of business “is to turn some of our vaccine technology into drugs quickly.”

Pooling SIGA’s strength in research and Allergy Therapeutics’ in development, the companies envision a successful future. “The whole basis of allergy and infectious disease is based in immunology,” Ross said. “We both have research and development in the immunology area, so by combining some of their research and some of our development, we believe we can potentially develop an oral vaccine for allergy in the U.S. which would be a very big product.”

Allergy Therapeutics, once part of SmithKline Beecham, was founded in 1998 when management members bought it. The company has 240 employees, including a sales force in Germany, Italy, Spain and other countries.

Drapkin said the employees will retain their positions.

Allergy Therapeutics has turnover in excess of $20 million per annum through the sale of registered and named patient vaccines for the treatment of severe allergies to grass, three pollens, house dust mites and bee and wasp venoms.

SIGA’s stock (NASDAQ:SIGA) closed Monday at $2.61, up 1 cent.