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Sirna Filing with the SEC Details Amended Terms of Skinetics Acquisition, New Purchase Price

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Sirna Therapeutics has paid out about 25 percent fewer shares for its acquisition of dermatology firm Skinetics Biosciences than it had originally planned, the company said last week in a US Securities and Exchange Commission filing. Based on the rising value of Sirna's stock lately, however, the deal ended up being worth approximately $500,000 more to Skinetics.

Last week, Sirna announced that it had acquired Skinetics as part of its establishment of a dermatology unit, Sirna Dermatology, which would tackle the development of an siRNA-based drug for permanent hair removal. That product, targeting a gene known as hairless, will be administered topically and is expected to be ready for phase I testing early in 2006 (see RNAi News, 12/10/2004).

As RNAi News reported in November, information from another SEC filing made by Sirna indicated that the company was planning to make an acquisition of a privately held firm (see RNAi News, 11/26/2004). That earlier filing indicated that Sirna had planned to close the deal for 680,272 shares of its common stock plus milestones and royalties.

In an SEC filing dated Dec. 10, however, Sirna said that the terms of the Skinetics deal had been amended, and that it paid the sellers of the firm "505,833 shares of Sirna common stock, 269,777 of which [had been] subject to vesting tied to invention assignment and non-competition obligations [but were] issued to the sellers upon the closing of the acquisition."

Additionally, the sellers of Skinetics stand to receive "a contingent issuance of a maximum of 170,068 shares of Sirna common stock," as well as "possible future payments payable upon the achievement of incremental product development and clinical trial milestones [and] possible royalty payments constituting a percentage of future product sales."

The milestone and royalty payments may be paid in cash, Sirna stock, or a combination of both, according to the SEC filing. Based on the closing price of Sirna shares on Dec. 6, the date of the amended acquisition agreement, the stock portion of the deal is worth about $2.4 million. Under the terms of the original agreement, dated Oct. 12, and based on Sirna's stock price at the time, the deal would have been valued at $1.9 million, exclusive of milestones and royalties.

The filing also states that the amended terms of the acquisition required Skinetics to have demonstrated in vivo efficacy. Howard Robin, president and CEO of Sirna, told RNAi News this week that this preclinical demonstration showed that siRNAs targeting hairless are able to induce structural changes in the hair follicles so that hair growth is prevented.

Further, the new terms of the acquisition required that the sellers of Skinetics enter into invention-assignment, non-competition, and/or consulting agreements with Sirna, and that certain third-party intellectual property licenses be negotiated before the deal would close, according to the SEC filing.

Finally, the SEC filing states, the amended acquisition agreement requires that Sirna provide "reasonable support for product development by the sellers [of Skinetics] as conducted within [the] newly formed dermatology division of Sirna."

- DM

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