AFFINITY BIOTECH WILL RECEIVE UP TO $3.4 MIL. FROM SMITHKLINE BEECHAM
AFFINITY BIOTECH WILL RECEIVE UP TO $3.4 MIL. FROM SMITHKLINE BEECHAM for development of an micro-emulsion oral delivery system, start-up Affinity Biotech said in a March 4 registration statement for an initial public offering. Under an agreement signed in February, SmithKline Beecham will provide $360,000 in research funding for an oral formulation of a specific SmithKline therapeutic protein that has not yet been approved for marketing. SB also will make milestone payments to Affinity, up to an aggregate $3 mil., the prospectus says. Affinity says that its technology "enables therapeutic proteins to enter the bloodstream across the lining of the GI tract" by encasing them in submicroscopic water droplets approximately 0.1 micron in diameter. The droplets "are dispersed throughout a lipid medium and stabilized by emulsifiers," Affinity explains. "In its commercial form, a conventional capsule will be used to protect the microemulsion from destructive digestive acids of the stomach. Once in the small intestine, the therapeutic protein is released through a proprietary process that facilitates its uptake into the bloodstream." SmithKline will pay a royalty to Affinity on product sales ranging between 2% and 7%. The pharmaceutical firm also has rights to negotiate an exclusive license to use Affinity's technology "for specified therapeutic agents." In addition to the oral therapeutic project, Affinity also is working with SmithKline on a "taste-masked formulation for a liquid version of one of SmithKline Beecham's major products." The product belongs to a "widely prescribed" class of drugs, the prospectus adds. Affinity expects SmithKline to begin the approval process for the taste-masked product in 1993. SmithKline's S.R. One venture capital fund invested $1 mil. in Affinity in February, bringing its total investment to date to $1.4 mil. or 19.6% of shares outstanding, the prospectus notes. If the stock offering is successful, SmithKline's stake will drop to 12.1%. Affinity is offering 2 mil. shares at a proposed price of $8 per share. Pennsylvania Merchant Group is underwriting. The company says that expected net proceeds of $14 mil. will go primarily to support independent projects, including development and clinical trials of an oral formulation of calcitonin for treatment of osteoporosis and other bone degeneration diseases. Affinity plans to begin "proof of concept" clinical trials with a prototype formulation of calcitonin in suppository form at Ninewells Hospital in Dundee, Scotland, in mid to late 1992. In the U.S., Affinity expects to run preclinical safety and toxicity studies in mid-1992, "followed shortly thereafter by the filing of an" IND. The company also is pursuing independent taste-masked products, including taste-masked formulations for acetaminophen and erythromycin, the filing notes. The company also says it is "negotiating a licensing agreement with the manufacturer of a leading brand of ibuprofen covering the company's chewable taste- masked formulation of this drug." Other independent projects include an oral formulation for insulin, still in the conceptual stage, and microemulsion oral delivery formulations of therapeutic proteins licensed from their developers or owners. "In this pursuit, the company anticipates focusing primarily on growth factors," the prospectus says. In addition to SB, other "strategic alliances" include a feasibility study agreement with Genentech, focusing on microemulsion formulations of "certain recombinant proteins." Also, Mallinckrodt Medical is sponsoring Affinity research on "an improved microemulsion formulation of synthetic blood, using perfluorocarbons as oxygen-carrying substitutes for hemoglobin," the prospectus adds. "The new formulation...is expected to show significant improvement over conventional perfluorocarbon systems." Based in Boothwyn, Penn., Affinity was founded in 1990 by a group of managers and researchers from Adamantech, a subsidiary of Sun Company, to develop proprietary microemulsion technology for use in drug delivery. Sun currently holds 6% of Affinity's stock (194,703 shares). Affinity Chairman Winston Churchill formerly headed a private investment firm; President Alan Dickason, PhD, was previously director of research at Adamantech. Affinity's board of directors includes Bryce Douglas, PhD, who retired from a position as VP, science and technology, at SmithKline Beckman in 1986. Affinity has 16 employees.
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