MGI PHARMA to Acquire Zycos
Wednesday September 1, 6:00 am ET
Pivotal Phase 3 Program for ZYC101a Planned for Early 2005
MINNEAPOLIS--(BUSINESS WIRE)--Sept. 1, 2004--MGI PHARMA, INC. (Nasdaq:MOGN - News), an oncology-focused biopharmaceutical company, and Zycos Inc., a privately held company focused on the creation and development of oncology and antiviral products, today announced that they have signed a definitive merger agreement under which MGI PHARMA will acquire Zycos for $50 million in cash. This transaction, which has been approved by the boards of directors of both companies, is subject to approval by the stockholders of Zycos. MGI PHARMA and Zycos expect the transaction to close in September 2004.
With this transaction, MGI PHARMA takes a significant step toward fulfilling its goal of building a leading oncology franchise. Zycos' iterative drug formulation process allows for the rapid development of immune response therapeutics and has generated two compounds that are currently in clinical development. The Company's most advanced clinical candidate is ZYC101a, a product candidate that has completed phase 2 studies in patients with cervical dysplasia, a potentially precancerous condition. If ZYC101a is approved, it will be promoted to gynecologists, who are also anticipated to be a physician target audience for Aloxi® injection for post operative nausea and vomiting (PONV). Additionally, the Zycos scientific team has significant expertise in immunology and the development of biologics, which will augment the oncology experience of the MGI PHARMA development team. Mary Lynne Hedley, Ph.D., co-founder, president, and CEO of Zycos, will become senior vice president and general manager of MGI PHARMA Biologics, located in Lexington, MA.
"We believe that this strategic acquisition allows us to broaden our portfolio of clinical candidates and leverage our expertise in oncology product development and commercialization," said Lonnie Moulder, president and chief executive officer of MGI PHARMA. "I am very pleased that Dr. Hedley is joining the MGI PHARMA executive management team and we look forward to her contributions and those of the outstanding team in Lexington."
"As part of MGI PHARMA, we believe that we will have the financial, regulatory and commercial strength to accelerate our clinical programs," said Mary Lynne Hedley, Ph.D., co-founder, president, and chief executive officer of Zycos Inc. "Both companies have a shared commitment to delivering new oncology therapies to the market. We are very proud of our accomplishments to date and look forward to becoming a part of the MGI PHARMA team."
Creating An Oncology Franchise
Zycos' pipeline of products includes ZYC101a, an immune response therapeutic that has completed a randomized phase 2 study in patients with high-grade cervical dysplasia, a condition that can lead to cervical cancer. Administration of ZYC101a stimulates an immune response that targets cells containing human papillomavirus (HPV), the agent that causes both cervical dysplasia and cervical cancer.
A phase 2, multicenter, randomized placebo controlled study of 161 women with high-grade cervical dysplasia was conducted in the United States and Europe. Patients enrolled in the phase 2 study received an intramuscular injection of ZYC101a every three weeks for a total of three doses. ZYC101a was shown to be safe and well tolerated. In a prospectively defined cohort of patients under 25 years of age, the drug promoted resolution of high-grade dysplasia in 70% of patients, versus 23% in the placebo arm. In all patients, resolution was 43% for patients on drug and 27% for patients on placebo.
In other open label trials, the drug was found to be safe and well tolerated and disease resolution was observed in a high percentage of young patients.
The most frequently observed adverse event in these studies was mild to moderate injection site pain, which was manageable with ibuprofen or acetaminophen. MGI PHARMA plans to initiate a pivotal program for ZYC101a in early 2005.
The second Zycos compound in clinical development is ZYC300. ZYC300, an encapsulated plasmid encoding a novel tumor antigen, has completed a phase 1/2a study in 17 patients with late stage metastatic hematological and solid tumors. Data from this study were selected for oral presentation at ASCO 2003, and indicated that ZYC300 was well tolerated and biologically active.
In addition to ZYC101a and ZYC300, Zycos' proprietary immunotherapeutics development platform may serve as a future source of additional clinical candidates.
UBS Investment Bank acted as exclusive advisor to MGI PHARMA in this transaction. SG Cowen Securities Corporation acted as exclusive advisor to Zycos.
Updated Financial Guidance
This section provides forward looking information about MGI PHARMA's updated financial outlook for 2004 for our current operations, including the impact of the three agreements announced in news releases issued this morning, September 1, 2004. For the year ending December 31, 2004, we currently expect:
* Aloxi® injection sales of $140 to $150 million;
* Other product sales of $27 million;
* Licensing revenue of $3 million;
* Research and development expenses of approximately $29 million that excludes an estimate of one-time in-process research and development and nonrecurring licensing expense of $98 million associated with the three transactions announced today;
* SG&A expenses of approximately $73 million; and
* Net loss before interest and taxes of approximately $80 million.
For the year ended December 31, 2005, we expect total revenues of approximately $280 million and total operating expenses of approximately $205 million, which would result in earnings before interest and taxes of approximately $75 million. We anticipate that the product candidates acquired in the three transactions announced today could add $500 million in additional combined net sales to our total revenue approximately three to four years after their commercial launches.
Conference Call And Webcast Details
MGI PHARMA will host a conference call today, September 1, 2004 at 9:30 a.m. Eastern Time to discuss the three news releases issued by the Company this morning and the Company's updated financial guidance, and to answer questions from investors and analysts. Lonnie Moulder, president and chief executive officer of MGI PHARMA, will host the call. All interested parties are welcome to access the webcast via the Company's Web site at www.mgipharma.com. This audio webcast will be archived on the Company's Web site for a limited period of time.
About Cervical Dysplasia and Cervical Cancer
MGI PHARMA estimates that 250,000 to 400,000 women are diagnosed with high-grade cervical dysplasia each year in the United States. The American Cancer Society estimates that in 2004, about 10,520 cases of invasive cervical cancer will be diagnosed in the United States, and that about 3,000 women will die of cervical cancer. Current treatments for high-grade cervical dysplasia are limited to invasive procedures designed to remove cervical tissue in order to prevent progression to cancer. ZYC101a may offer physicians and patients an effective pharmaceutical alternative to surgery.
About Zycos
Zycos is a privately held biotechnology company focused on developing oncology and antiviral products for large, unmet markets. Zycos has an antiviral drug, ZYC101a, designed to treat diseases caused by human papilloma virus. Zycos is committed to rapidly building a rich pipeline of novel, safe and effective therapies by exploiting its proprietary drug discovery and development platform and in-licensing products for clinical development. For more information about Zycos please visit www.zycos.com. |
