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Avantogen Limited (Avantogen) (ASX:ACU), and Hawaii
Biotech, Inc. (Hawaii Biotech), a privately held company, today
announced that they have entered into a Definitive Agreement to
combine their respective vaccine businesses. The combined business, as
yet unnamed, will be 50% owned each by Hawaii Biotech's current
shareholders and Avantogen Limited and will focus exclusively on
prophylactic and therapeutic vaccine development.
The transaction, which is contingent on approval of both Avantogen
and Hawaii Biotech shareholders, is expected to close in late April,
2006. The combined business will incorporate both Avantogen's and
Hawaii Biotech's complementary technologies, and will maintain the
existing vaccine development laboratories in Oahu, Hawaii, with
corporate headquarters in Southern California. This new agreement
builds upon a previously executed License Agreement between Avantogen
and Hawaii Biotech in which Hawaii Biotech successfully evaluated
Avantogen's proprietary immunostimulatory adjuvant, GPI-0100, for use
in Hawaii Biotech's West Nile vaccine.
Under terms of the agreement, Avantogen will contribute US $3.5
million in cash, its vaccine adjuvant program (currently in Phase I
human trials) and Pentrys vaccine program (currently in Phase II human
trials), and its senior management team, while Hawaii Biotech will
contribute its vaccine research and development team, its pre-clinical
vaccine programs and facilities, its vaccine grant funding, and US $1
million in cash. Under certain circumstances applicable to both
Avantogen and Hawaii Biotech, equity ownership of the newly combined
company can be adjusted to 60%-40% in either direction.
Leonard Firestone, M.D., current CEO of Avantogen, will become CEO
of the newly combined company, while Carolyn Weeks-Levy, current VP of
Research, Development, and Regulatory Affairs and leader of Hawaii
Biotech's vaccine programs, will become its Chief Scientific Officer.
Bruce Nye, Avantogen's CFO, will become CFO. David G. Watumull will
remain CEO of Hawaii Biotech's current anti-inflammatory small
molecule development business, which will be spun out into a new
entity, Cardax Pharmaceuticals, Inc., to be wholly owned by current
Hawaii Biotech shareholders.
Initial board members will be: Avantogen Chairman Richard Opara,
who will serve as Chairman; current Hawaii Biotech Chairman Nick
Mitsakos; Leonard Firestone, M.D., CEO; Joseph Boystak, formerly
Managing Director with Jefferies & Co and now with Chopin Capital
Partners; and a fifth member to be chosen by Hawaii Biotech.
New Board Chairman Dr. Richard Opara, who is also Chairman of
Avantogen, commented: "This combination will create a truly
exceptional biotechnology company, and is a pivotal step in
restructuring Avantogen to optimize the value of its assets for the
benefit of its shareholders. Our vision is to create a public company
that is a world leader in the development of recombinant vaccines for
prevention of common, deadly, incurable diseases using our
proprietary, state-of-the-art manufacturing methods. These methods
will allow us to lead the marketplace by rapidly delivering the
quality and quantity of vaccine product needed to address worldwide
pandemic diseases such as Influenza. We also see worldwide potential
for the development of the West Nile and Dengue Fever vaccines."
"We have explored a number of options over the past year for the
development of our vaccine business," added David G. Watumull, CEO of
Hawaii Biotech. "We believe that this strategy is our best choice as
it brings together the necessary financial, scientific, and management
resources to focus and accelerate development of our vaccines,
including those for avian flu, West Nile, and dengue fever."
Hawaii Biotech Vaccine Background
Hawaii Biotech's vaccine development platform is based on
production of proprietary antigens (proteins) that, when appropriately
adjuvanted, provoke immune responses equivalent to, or better than,
traditional live or inactivated viral vaccines -- with a significantly
improved safety profile. During the past 3 years, Hawaii Biotech
received funding commitments of over US$30 million from the U.S.
National Institutes of Health and other governmental agencies, to
develop vaccines to prevent human infection by the West Nile virus,
Dengue Fever virus, pandemic and annual Influenza viruses, and other
serious incurable diseases including hepatitis C, malaria, Tick-borne
and Japanese encephalitis, Ebola, and Eastern equine encephalitis.
Avantogen Adjuvant Background
Avantogen's GPI-0100 product is currently under license to Pfizer
Animal Health, Inc., Endocyte, Inc., University of Alabama, and
Memorial-Sloan Kettering Cancer Center, to boost immune responses to
their respective vaccine-based products under development.
About Pandemic Influenza and "Bird Flu"
The Centers for Disease Control (CDC) defines an influenza
pandemic as a global outbreak that occurs when a new, virulent
influenza A virus "emerges" in the human population, and spreads
easily from person to person worldwide. Local outbreaks of "bird flu"
may be a source of a new flu virus. Pandemics are different from
seasonal outbreaks or "epidemics" of influenza. Seasonal outbreaks are
caused by subtypes of influenza viruses that already circulate among
people, whereas pandemic outbreaks are caused by new subtypes that
"emerge," or by subtypes that haven't circulated among people for a
long time, or ever. Past influenza pandemics have led to high levels
of illness, death, social disruption, and economic loss. The severity
of the next pandemic cannot be predicted, but models suggest that in
the absence of any control measures (eg, vaccination), a
"medium-level" pandemic in the U.S. could cause 89 - 207,000 deaths,
314 - 734,000 hospitalizations, 18 - 42 million outpatient visits, and
another 20 - 47 million people being sick. Between 15% and 35% of the
U.S. population could be affected by an influenza pandemic, and the
economic impact could range between $71.3 and $166.5 billion.
About West Nile Virus
Virtually unknown in the U.S. prior to 1999, the West Nile virus
is now permanently established throughout the U.S. and Canada.
According to the CDC, in 1 of 150 infected with West Nile,
encephalitis and meningitis will occur, characterized by polio-like
symptoms. Live, attenuated virus vaccines being developed by potential
competitors have a small, but real risk of causing severe,
encephalitic West Nile disease. Hawaii Biotech's approach has been to
utilize genetically engineered viral proteins that cannot cause
disease, conferring a substantial safety advantage. Estimates of U.S.
market size for a West Nile Virus Vaccine are between $200 and 500
million, annually. Unlike most human viral diseases, West Nile causes
both disease and death in animals. In a well-validated animal model of
human West Nile disease, the company's West Nile vaccine conferred
100% protection from viral challenge vs. 77% mortality in controls.
Forward-Looking Statements
Statements contained in this press release that are not historical
information are forward-looking statements as contemplated by the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those projected or implied.
Such potential risks and uncertainties relate, but are not limited, to
the results of clinical trials, product demand and market acceptance,
the impact of competitive products and pricing, effectiveness and pace
of current and future product development, and regulatory approval.
More detailed information on these and additional factors that could
affect Avantogen's business, prospects and operating and financial
results are described in Avantogen's annual reports filed or to be
filed with the Australian Stock Exchange. Avantogen urges all
interested parties to read these reports to gain a better
understanding of the many business and other risks that the company
faces. For further information visit www.avantogen.com The historical
results achieved by the company are not necessarily indicative of its
future prospects. The company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.