NEW YORK, Sept. 5 - In an effort to focus more closely on drug development, Montreal-based SignalGene said today that it would spin off its functional-genomics unit into a new company.
SignalGene will transfer to the new company its entire functional genomics unit, including the STAR gene-expression technology and related IP. In exchange, SignalGene will receive between C$3.5 million and C$4.5 million, or between $2.2 million and $2.9 million, in common shares of the new firm. The transaction is expected to close in early October.
The new business, tentatively named Alethia Biotherapeutics, will initially be headed by Mario Filion, chief of SignalGene's functional-genomics division. All 16 employees of that unit will also be transferred to the new company and receive up to 10 percent ownership in the firm, said SignalGene CFO Doris Belzile.
Alethia will identify new targets and treatments for diseases that primarily affect women, including osteoporosis, breast cancer, and ovarian cancer.
Canada's helping hand
The new venture, which will save SignalGene roughly C$1.4 million a year in costs, will be subsidized by generous governmental grants and investments: The firm will draw upon a C$4 million grant SignalGene received last April from Genome Canada, the Canadian quasi-governmental funding body, to study women's health. Genome Quebec, the regional branch, also intends to invest C$6.1 million in the new company during the next three years in exchange for preferred shares and warrants.
Those financial pledges saved SignalGene's functional-genomics unit from the fate of its population-genetics unit, which was shuttered last spring as part of cost-cutting and refocusing efforts.
"We were looking for a more positive solution for the functional-genomics unit," said Belzile. "We wanted to try to do a deal instead of closing it. There are possibilities and nice opportunities for this new company."
SignalGene, which focuses on hormone-related disorders, currently has three drugs in preclinical development: an anti-angiogenesis treatment for breast cancer and two drugs for prevention of osteoporosis and menopause-associated cardiovascular disease. The company spent roughly C$900,000 on R&D last quarter and held C$10.2 million in cash and cash equivalents as of June 30.