Proceutics Sale Gives CytRx R&D Funds, Oread Pre-Clinical Services

Oread Pharmaceuticals is expanding its preclinical development services via the $1.5 mil. acquisition of Proceutics from CytRx.

Based in Norcross, Ga., Proceutics provides preclinical pharmaceutical development services to CytRx and outside clients. Last year, the business turned profitable on roughly $2 mil. in revenues. Approximately 30% of its work was for CytRx and its other subsidiaries and 70% was for clients.

Oread and CytRx began discussions about the acquisition in late 1997. The deal, which was announced on Feb. 16, includes an $800,000 cash payment and $700,000 in credits for future research.

Oread will gain access to a 25,000 square foot laboratory and a staff of approximately 50 scientists. The purchase price, however, does not confer ownership of the lab property. An unnamed third party has acquired the facility for $5 mil. and will lease the lab to Oread.

For CytRx, the Proceutics divestiture gives the biotech company a needed cash infusion as it enters late-stage clinicals for its lead compound, Flocor, a non-ionic copolymer surfactant rheologic agent formerly known as RheothRxpf . At the end of 1997, CytRx had $11.2 mil. in cash.

CytRx plans to begin Phase III trials of Flocor in sickle cell anemia within the next few weeks. The double-blind trial will enroll 350 patients. Primary endpoints will be pain intensity and crisis duration. The company expects the trial to be completed in 16 to 18 months.

Glaxo Wellcome returned the rights for RheothRx in October 1995 after results from a Phase II/III trial as a thrombolytic adjuvant for acute myocardial infarction showed clinical benefit only in a limited number of patients at high dose levels associated with unacceptable toxicity. CytRx claims the purified version of the drug has one-third the toxicity of ReothRx.

CytRx continues to seek licensees interested in developing the drug for occlusive disorders such as heart attack, stroke, hemorrhagic shock and respiratory distress. The company holds a composition of matter patent for the purified version; it had a use patent for ReothRx.

The Proceutics acquisition is one of three purchases made by Oread in the past year and a half. In March, Oread acquired Blis-Tech, a clinical trial packaging company, following 10 months of discussions. Based in Fairfield N.J., Blis-Tech has 120 employees.

In late 1996, Oread added manufacturing to the services it can provide clients with the acquisition of Syntex' Palo Alto manufacturing and formulation development facility ("The Pink Sheet" Jan. 27, 1997, p. 11). Oread said it plans to expand Blis-Tech's operations to the Palo Alto facility "to better service Oread's clients on the West Coast."

Oread provides a variety of services to companies filing NDAs, ANDAs and AADAs: analytical development, bulk drug characterization and preformulation, formulation development, dosage finish/dosage stability, technical transfer and manufacturing support, bulk drug sourcing and vendor qualifications, dosage manufacturers and validation, bioequivalence study and preparation of submission.

Oread's latest NDA success is Cafcit (caffeine citrate injection), which received an approvable letter Feb. 24. Developed for treating apnea in premature infants, Cafcit is a product of a joint venture, O.P.R. Development, between Oread, Roxane Labs and Pediatric Pharmaceuticals. Oread provided data and basic information on analytical chemistry and formulation development for the product, which will be marketed by Roxane Pharmaceuticals.

The company hopes soon to be able to offer contract clinical research services to its clients. Oread said it is in acquisition discussions with several firms.

Oread's recent buying spree typifies the merger and acquisition activity taking place across the pharmaceutical services sector as the primary players seek to fill out their service and geographical offerings.

In February, Phoenix International acquired clinical trial contractor IBRD-Rostrum Global from Kurya Corporation for $28 mil. And in early March, Parexel announced three acquisitions in Europe: PPS Europe/Genesis Pharma Strategies, a 250-employee company that provides physician-focused marketing and clinical communications; Amsterdam-based MIRAI B.V, a CRO; and LOGOS GmbH, a regulatory affairs consulting firm based in Freiburg, Germany.