Executive Summary

ZYNAXIS GETTING $3 MIL. LILLY INVESTMENT FOR CARDIOVASCULAR DRUG DELIVERY R&D under a collaborative agreement announced April 22. The agreement will use the Zynaxis proprietary Zyn-Linker drug delivery technology for drugs with "antithrombotic, antiplatelet and antiproliferative activity for (1) reducing cellular hyperplasia in the blood vessels of patients with vascular disease and (2) reducing thrombotic complications, when applied to or by a delivery device," the biotech R&D firm said. Under the agreement, Zynaxis' first corporate partnership, Lilly is making a $3 mil. equity investment in Zynaxis, which confers a 4.3% stake in the publicly-traded company. Zynaxis will receive milestone payments, rights to manufacture products for Lilly and royalties on sales of any products commercialized. Zyn-Linkers are organic cell linker molecules that can be attached to therapeutic drugs and radiopharmaceuticals to form a conjugate. Zyn-Linkers can deliver product via catheters, injection, topical application or other delivery methods to a disease site where the conjugate is retained on or in the cells. The Zyn-Linker technology initially was developed and patented by the company founders while they were employed at Smith Kline & French Labs. SmithKline Beecham currently holds a 7.7% stake in Zynaxis. The Zyn-Linker technology allows the retention and slow release of drugs at the site of an angioplasty. The company said it believes the technology is better than the sustained use of high doses of drug used in traditional drug delivery forms which can lead to adverse effects. In the company's prospectus for its recent initial public offering, Zynaxis theorized on the basis of animal studies that drugs must be retained at angioplasty sites for a number of days to be effective in reducing restenosis. The company's animal studies showed that "approximately 50% of Zyn-Linkers initially attached to cells on an animal artery were retained...for approximately 15 to 25 days," the prospectus states. Founded by Chairman and Chief Scientific Officer Paul Horan, PhD, and Director of Biology and In Vivo Technologies Katherine Muirhead, PhD, Zynaxis started operations in 1988. The firm's CEO and president is Thomas Cekoric, who joined Zynaxis in March 1991 from American Home Products' API division. The Malvern, Penn.- based biotechnology R&D firm's other core product development area is a cell monitoring system for CD4 and CD8 cell counts. The IPO, completed on Jan. 31 of this year, raised $23 mil.