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Caprion to Sell CellCarta, Leave Proteomics Market as it Merges With Ecopia BioSciences

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In another sign of the tremulous state of proteomics businesses, Caprion Pharmaceuticals last week announced it will be pulling out of the proteomics space and merging with Ecopia BioSciences to become an oncology and infectious disease firm.
 
The announcement comes eight months after Caprion declared its intentions to go public, which ultimately fizzled in July 2006.
 
As part of its planned merger with Ecopia, Montreal-based Caprion will sell off its CellCarta proteomics business within 12 months after the close of the merger “so as to focus on exclusively pharmaceutical product development,” the companies said in a joint statement.
 
Ecopia, based in Saint-Laurent, Quebec, is a cancer drug-development firm.
 
In a conference call last week, Ecopia President and CEO Pierre Falardeau said the deal is expected to close within six to 12 weeks. A name for the new company has not been chosen yet. Shares of the company will be traded on the Toronto Stock Exchange, he said.
 
Lloyd Segal, currently president and CEO of Caprion, will be the CEO of the new company, while Falardeau will be its COO.
 
Segal said that interest among potential buyers for the CellCarta protein-analysis platform is “significant and material” but declined to elaborate. He also declined to comment on an asking price for the business.
 
Formed in 1988, the company first dipped its toes into the proteomics pool in 2001 when it created a facility outfitted with about 18 mass spectrometers. Today, its proteomics services business is built around the CellCarta platform.
 
CellCarta allows researchers to analyze large sets of biological samples by simultaneously tracking more than 25,000 peptides contained in a sample. By doing so, they can identify proteins whose levels change according to states of health and disease, or as a result of drug therapy.
 
In its IPO filing with Canadian regulators in May, Caprion hailed CellCarta as “one of the leading discovery engines in the area of proteomics.” The company added that collaborations forged between Caprion and other parties had resulted in revenues of more than CA$25 million ($21 million) and bookings of more than CA$10 million.
 
The collaborations had the potential of generating future milestone payments of more than CA$70 million in seven to 10 years, the company projected [See PM 08/06/06].
 
Company officials, however, were also clear about where they saw the company going: “Our goal is to become a leading biopharmaceutical company focused on the discovery, development and commercialization of biologics in infectious disease and oncology,” the company said in the filing.
 
When Caprion withdrew its IPO in July in a one-sentence announcement, it cited “adverse market conditions” as its only reason. Last week, Segal said that as company officials met with potential investors in its IPO road show during the spring and summer, “it became apparent that some in the investment community couldn’t wrap their brains around “both the clinical operation together with this service business.”
 
“The way we look at [the divestiture] is not so much as getting out of the proteomics space,” Segal said. “Our intention is to always keep an ability to practice the distinctive and proprietary technologies that we have, but to separate out the service business that we operate from our core clinical and drug development business.”
 
It’s a strategy that other companies have followed in recent years as the difficulties of translating a complex science into a profitable business have caused some proteomics companies to scale back or, in some cases, abandon proteomics completely.
 

“The way we look at it is not so much as getting out of the proteomics space. Our intention is to always keep an ability to practice the distinctive and proprietary technologies that we have, but to separate out the service business that we operate from our core clinical and drug development business.”

In recent years, numerous proteomics service outfits born in anticipation of a financial bonanza resulting from the completion of the Human Genome Project have gone under, while large drug manufacturers scaled back their proteomics operations.
 
Most recently, Ciphergen last year divested its proteomics tools line to Bio-Rad [See PM 08/17/06] while PepMetric abandoned its protein-analysis business [See PM 10/05/06].
 
The company resulting from the Ecopia/Caprion merger will have three active clinical therapeutic programs in development for commercialization: Caprion’s Shigamabs, a dual antibody product for the treatment of Shiga toxin-producing bacterial infections; its CAP 232, an intravenously administered peptide treatment for metastatic melanoma and pancreatic cancer; and Ecopia’s 4601 compound for several human cancer cell lines including leukemia and melanoma.
 
After completion of the merger, shareholders of Caprion will receive almost 70 million shares, or half of the new company’s stock. An effort to secure at least $30 million in private placement has also been launched with Desjardins Securities and Dundee Securities as co-lead agents. Picchio Pharma and Power Technology Investment have placed a lead order of $4 million in the proposed financing, the companies said.
 
The board of the new company will comprise two members designated by Ecopia, two by Caprion, one by Picchio Pharma, three independent members, and the CEO.

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