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PROCEPT IMMUNE RECEPTOR RESEARCH HAS $10 MIL. IN FUNDING FROM BRISTOL-MYERS SQUIBB

Executive Summary

PROCEPT IMMUNE RECEPTOR RESEARCH HAS $10 MIL. IN FUNDING FROM BRISTOL-MYERS SQUIBB, the start-up biotechnology firm said in a March 24 preliminary prospectus for an initial public offering. Under a 1990 agreement, Bristol-Myers Squibb will pay Procept approximately $10 mil. for the "development of drugs for [the] treatment of autoimmune diseases." The immune receptor Phase I development program covers a five- year span and includes development costs, milestone payments and royalties on all products marketed by BMS, the prospectus states. To date, Procept has received $3.8 mil. from BMS, $1.3 mil. in 1990 and $2.5 mil. in 1991. In May 1991, the agreement was amended to focus on insulin-dependent diabetes and to guarantee payment of $2.8 mil. for 1992 and a minimum of $1.5 mil. in both 1993 and 1994. In 1991, "all research revenues received...came from Bristol-Myers Squibb," the prospectus states. Currently Procept has no "manufacturing, marketing or sales capabilities." In the event that these facilities are developed and the company markets specific therapeutic compounds covered by the BMS agreement, Procept is obligated to pay royalties to BMS, the prospectus says. With an estimated selling price of $12 per share for 1.5 mil. shares, Procept hopes to generate net proceeds of $16.3 mil. from the offering. The company plans to use the funds for R&D, projecting that the proceeds will be sufficient to cover "operating expenses and capital requirements...through June 1994." The offering is underwritten by Tucker Anthony. Procept and Bristol-Myers Squibb are working in conjunction with the Dana-Farber Cancer Institute to develop drugs based on a "new core technology" that utilizes Procept's "proprietary knowledge" of T-cell antigen receptors (TCRs). Since February 1987, Procept has provided funding to support TCR research being performed by Dana-Farber Director of Immunology Ellis Reinharz. Functioning TCRs, which first "recognize antigens as being foreign," stimulate normal immune responses, while "autoreactive" TCRs are believed to "contribute to the onset of autoimmune diseases such as rheumatoid arthritis, insulin-dependent diabetes and multiple sclerosis," the prospectus explains. Having determined the structure of TCRs, Procept hopes to develop oral or injectable agents that "will block the activity of these [autoreactive] TCRs" or "stimulate an immune response against autoreactive T cells." Procept currently funds academic researchers working at the University of California-San Francisco, Harvard, the University of South Carolina and Joslin Diabetes Center in Boston. Procept's future in the immune receptor area hinges, in part, on the approval of various patent applications. While the company says it has "exclusive worldwide rights...to discoveries in the field of T cell activation," applications relating to the CD4 and CD2 protein receptors are still pending both in the U.S. and abroad. Under Procept's CD4 drug program, compounds believed to "exhibit either anti-HIV or immunosupressive activity" have been developed. The company expects to file an IND in 1993 for PIC 024, a compound that potentially blocks HIV binding to T cells, the prospectus states. Filings for PIC 033/101/102 for rheumatoid arthritis and PIC 060 for psoriasis are projected for 1994 and 1993, respectively. Founded in 1985, the Cambridge, Mass.-based firm draws on the biotech experience of several company execs. President and CEO Stanley Erck came to Procept from Integrated Genetics where he was VP-corporate development. Michael Concino, PhD, left T Cell Sciences to join Procept as director of protein expression, and Michael Recny, PhD, director of protein biochemistry, came from Genetics Institute. Procept has 42 employees, of whom 33 are engaged in research and development.

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