Skip to main content
Premium Trial:

Request an Annual Quote

Equity Stake in Drug Maker Does Not Signal CombiMatrix s Intent to Exit Array Business

Premium

Customers of CombiMatrix’s custom microarrays concerned about the company’s plans to become a majority stake holder in a nascent drug discoverer can breathe easy: The Acacia unit does not plan to exit the microarray tools business.

“One [thing] we want to do is diversify,” said Bret Undem, a CombiMatrix spokesman. But “we have no intentions of deemphasizing the other areas of our business.”

Instead, CombiMatrix, which this week said it intends to pay $4 million over the next 24 months to acquire a 33-percent stake in Leuchemix, describes the move simply as a long-term investment strategy.

If Leuchemix’s pipeline of small molecules starts producing viable candidates, and the company goes public, CombiMatrix can, like any other typical private-equity investor, cash out and reap a windfall.

CombiMatrix “took a stake in [this] drug-discovery company with the hopes that they’re successful, and that we would gain from their success,” said Undem.

Investors reacted disapprovingly, sending shares in CombiMatrix sliding 10.5 percent, or $.35, to close at $3 on Monday, the day the announcement was made.

“Our shareholders are probably not familiar with who Leuchemix is — obviously we need to educate and let people know what Leuchemix is about,” said Undem.

The investment is not CombiMatrix’s first foray into therapeutics, though. The firm is developing products for four major market segments: microarrays and diagnostics, arrays for homeland security purposes, nanotechnology, and drug development — a growing part of its business, according to CombiMatrix President and CEO Amit Kumar, who spoke last week at the UBS Global Life Sciences Conference in New York. (see p. 5 for more on Kumar’s presentation)

CombiMatrix has an ongoing collaboration with Spanish non-profit research institute IrsiCaixa to develop two siRNAs as anti-HIV agents. Based on early data from the collaboration, CombiMatrix plans to advance the siRNAs into animal testing. It also is working with IrsiCaixa on research and development of siRNAs targeting hepatitis C virus. (see BioArray News’ sister publication RNAi News, 7/23/04 for more on the collaboration)

CombiMatrix holds exclusive, worldwide rights to the siRNAs.

Kumar has maintained that CombiMatrix is not likely to bring its siRNA drug candidates through clinical trials on its own. “The key is, we don’t plan to develop these compounds from start to finish all the way,” he told RNAi News in July.

“Long-term, we plan to do a partnership … or multiple partnerships,” Kumar said. “Whether [they’re] delivery partnerships or clinical partnerships, it’s hard to say right now.”

Kumar anticipates that any future wide-scale partnership would likely be with a big pharmaceutical firm rather than a pure-play RNAi company. “We’re focusing more on larger organizations that have significant capital,” he said.

CombiMatrix currently sells or develops its custom array technology to the biodefense and biowarfare-detection communities, which have awarded the firm around $10 million in contracts.

It also is applying its chip platform to nanotechnology, highlighted by a recent developmental deal with Intel. The firm has been tight-lipped about the scope of that collaboration, but said it would disclose more details as it achieves certain milestones.

Terms of CombiMatrix’s equity position in San Francisco-based Leuchemix, which was part of a broader Series A round of financing, will allow the drug developer to use the chip technology in its own research, Undem said.

“If the board of Leuchemix decides that our technology can be useful, certainly CombiMatrix will help them” with it.

Kumar decided to invest in Leuchemix because he was “impressed” with its management, which includes former Deltagen CEO Bill Matthews and a former Roche Bioscience official, and its pipeline, according to Undem. Leuchemix is developing drugs for acute myelogenous leukemia, and hopes to expand its pipeline to include products for chronic myelogenous leukemia, myeloma, and lymphoma.

Undem didn’t discount the possibility of CombiMatrix making additional equity investments in Leuchemix, but said he’s not aware of any plans. Undem said the investment is not necessarily a prelude to the ultimate acquisition of Leuchemix. “We finished June with $28.9 million in cash,” he said. “I think our interest was to acquire a piece of this company.”

— KL, EW