12:00 AM
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Apr 18, 2011
 |  BioCentury  |  Strategy

Supercharging Astex

SuperGen-Astex merger aims to create mid-tier cancer company

SuperGen Inc. and Astex Therapeutics Ltd. are betting that by combining the former's cash with the latter's pipeline and drug discovery platform, they can create a mid-tier cancer company.

SuperGen has plenty of cash from Dacogen decitabine royalties and needs a cancer pipeline to fill the gap if Dacogen cannot add new indications that will extend its Orphan exclusivity.

Astex has a cancer pipeline and a discovery engine but needs cash for clinical development.

The combined company will start out with about $120 million in the bank, partnerships with five big pharmas, royalties from one marketed drug, seven NCEs in clinical development, and a preclinical pipeline that should produce a new IND every 12-18 months for about eight years, according to SuperGen Chairman, President and CEO James Manuso.

Changing models

For SuperGen, the merger is a logical step in achieving its third incarnation, as a drug discovery company.

The company was founded in 1991 to develop cyclodextrin-coated chemotherapies to create timed-release "super generics." But after clinical data showed the products were not sufficiently differentiated, SuperGen moved to a specialty pharma model with two key product acquisitions in the late 1990s.

In 1996, the company acquired hairy cell leukemia drug Nipent pentostatin for undisclosed cash and equity from Warner-Lambert Co. In 1999, SuperGen acquired Dacogen from Teva Pharmaceutical Industries Ltd.'s Pharmachemie B.V. subsidiary in exchange for undisclosed equity.

By the time Dacogen was approved in 2006, SuperGen had already determined it could not continue to operate as a specialty pharma company.

"Were we going to keep banging our heads against competitors to be a spec pharma when everyone was doing that? It got too expensive," Manuso said. "We couldn't compete as a spec pharma, so we might as well do in-house drug discovery."

Manuso divested Nipent - which was selling at a loss - to Mayne Pharma Ltd. for $42 million. Between that cash and about $100 million SuperGen received from MGI Pharma Inc. for worldwide rights to Dacogen, "we were building up a war chest," he said.

SuperGen discovered and began developing SGI-110, a second-generation version of Dacogen that has a longer half-life and can be delivered subcutaneously. The DNA (cytosine-5-)-methyltransferase 1 (DNMT1) inhibitor started Phase I/II testing for MDS and acute myelogenous leukemia (AML) in January, with preliminary data expected in 2H12.

The 2006 acquisition of Montigen Pharmaceuticals Inc. brought SuperGen amuvatinib and the...

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