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Executive Summary

SPHINX' KYNAC IND FOR PSORIASIS TREATMENT WILL BE FILED IN FIRST HALF 1992, the company said in a Dec. 6 prospectus for an initial public offering. Kynac, a topical protein kinase C (PKC) inhibitor, is the company's lead product. "Unlike existing psoriasis treatments, which have only a single therapeutic effect, Kynac has the advantage of providing both antiproliferative and anti-inflammatory therapeutic effects," the prospectus says. Sphinx "plans to submit an IND application for Kynac and initiate Phase I clinical trials in mid-1992." Sphinx expects to study a second PKC in 1992: Kynacyte, as an adjunct to chemotherapy in solid tumor cancers. When combined with doxorubicin (Adriamycin) or cisplatin in mice, Kynacyte showed "a significantly greater and longer inhibition of tumor growth... than with Adriamycin or cisplatin alone, and there was no apparent increase in toxicity." Sphinx "plans to submit an IND application for Kynacyte and initiate Phase I clinical trials in late 1992," the prospectus says. A second chemopotentiating PKC inhibitor, SPC 101591, is in "early preclinical" research, the prospectus notes. SPC 101591 is also in early preclinicals for reperfusion injury, as is another PKC inhibitor, SPC 100271. Sphinx has a second psoriasis treatment, SPC 101210, which is based on a different intracellular mechanism -- a class of lipid second messengers called "ceramides." While Sphinx is developing Kynac and Kynacyte on a proprietary basis, the firm also is working with Lilly in a research collaboration announced in November ("The Pink Sheet" Nov. 25, T&G-5). Sphinx announced its intention to go public within two weeks after that deal. Sphinx is seeking over $35 mil. from the offering of 3 mil. shares. The company expects the proceeds to fund operations through June 30, 1994, the prospectus says, with the majority earmarked for preclinical discovery and development work and "over 25%" for clinical studies. Sphinx noted that it does not expect any product approvals prior to 1997. Lilly is committed to fund the company's PKC research into cardiovascular diseases, inflammatory diseases, and central nervous system disorders with at least $12.6 mil. over four years, the prospectus says. Lilly also made a $4 mil. equity investment in Sphinx as part of the deal, and will own 6.8% of the company (680,358 shares) after the offering. SmithKline Beecham's venture capital fund S.R. One will own 6.1% (608,383 shares) after the stock sale, for which it paid a total of $1.5 mil. S.R. One participated in all four rounds of private financing for Sphinx. The private fundings raised almost $16 mil. Durham,N.C.-based Sphinx was founded by two Duke scientists in 1987: Robert Bell, PhD, serves as director and is chairman of the company's scientific advisory board; Carson Loomis, PhD, serves as VP-biochemical research. Sphinx' chairman is former Glaxo CEO Joseph Ruvane, whose other company, SyStemix, is being 60% acquired by Sandoz ("The Pink Sheet" Dec. 23, p. 3). Ruvane's 195,999 shares of Sphinx will be worth approximately $2.4 mil. after the offering. He does not have substantial holdings in Systemix. Sphinx President and CEO Clayton Duncan has a venture capital background. The firm's new chief operating officer, Glenn Cooper, MD, joined Sphinx in October 1991. Cooper was formerly Lilly's European clinical research director. Overall, Sphinx has 80 employees.

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