SEC filings mildly encouraging...esp. note 4.
Downside near term (till fall '98) seems very limited due to this cash infusion and the terms of the merger...
vxcl 10k significant...see note 4 at the end...
>>> resulting in a net cash infusion from CytRx to Vaxcel of approximately $2.3 million. In addition, at the date of closing, Vaxcel issued to CytRx a one-year warrant entitling CytRx to purchase a number of shares of Vaxcel common stock equal to the amount of
capital which may be necessary for Vaxcel to satisfy requirements for inclusion
in the Nasdaq SmallCap Market, divided by one-half of the $2.91 per share
transaction price at the date of closing.<<<
Vaxcel derives its rights to these four technologies from the following: (a) the rights to OPTIVAX(R) ("Optivax") are
derived from an exclusive, worldwide license agreement with CytRx Corporation ("CytRx"); (b) the rights to PLG microspheres for oral vaccine delivery are derived as a result of a May 1997 merger of Zynaxis, Inc. ("Zynaxis"), a publicly-held biotechnology company, with Vaxcel Merger Sub, a wholly-owned subsidiary of Vaxcel formed for the purpose of the transaction (such transaction hereinafter referred to as the "Merger"); (c) the rights to mucoadhesives for oral vaccine delivery are also derived as a result of the Merger; and (d) the rights to entrapment techniques for vaccine delivery using
certain water soluble polymers are derived from a Research Agreement and Option Agreement with Vanderbilt University ("Vanderbilt"). These four technologies are complementary to each other, thereby providing Vaxcel with a broad portfolio of technologies for the development of vaccines to be delivered by the injectable, oral, and mucosal routes of administration. Vaxcel's business strategy is to sublicense these adjuvant and delivery system technologies on a vaccine-by-vaccine basis to companies engaged in vaccine development.
PRODUCT DEVELOPMENT
Vaccine Adjuvants Delivery Systems. Vaccines are one of the most
powerful tools for controlling infectious diseases as routine immunization has caused a significant reduction in the number of cases and associated morbidity and mortality of a wide variety of
diseases. As a result of these past successes, several new vaccines are under research and development, many of which have the potential to be introduced within the next decade.
The demand for vaccine adjuvant and delivery system technologies has
emerged in recent years as scientists have recognized the need for compounds capable of generating potent immune responses. There are several medical / technical needs for such technologies, including: (a) reducing the number of injections for vaccines which require multiple doses; (b) increasing the potency of existing vaccines which are only marginally effective; (c) increasing the effectiveness of new subpotent vaccines under development; and (d) allowing the development of oral vaccines which provide mucosal protection
and have greater patient acceptance than vaccines given by needle injections.
Optivax is the tradename for a family of proprietary nonionic block
copolymers which augment or modify the immune response to vaccines when administered primarily by injection Cancer Vaccine. In March 1998, Vaxcel, executed a definitive license agreement with UCL for acquiring worldwide, exclusive rights to genetically engineered and mutated (beta)-Human Chorionic Gonadotropin ((beta)hCG) proteins
for use in the treatment and/or prevention of cancer. Vaxcel believes these genetically engineered and mutated (beta)hCG proteins should be excellent immunogens for the development of a therapeutic vaccine for a wide variety of cancers.
Except for pregnant women, healthy individuals do not normally produce
(beta)hCG. By means of the Merger with Zynaxis, this microencapsulation technology is exclusively licensed to Vaxcel in the field of oral vaccine delivery.
In May 1997 Vaxcel completed a merger with Zynaxis, resulting in the issuance of an aggregate of 12.5% of its outstanding (post-merger) shares of common stock to the former shareholders of Zynaxis. The acquisition also resulted in a significant cash contribution to the Company from CytRx (see Note 4).
4. ACQUISITION OF ZYNAXIS, INC.
In December 1996 CytRx, Vaxcel, Inc. ("Vaxcel") and Zynaxis, Inc.
("Zynaxis") signed an agreement whereby Zynaxis would be merged with a
wholly-owned subsidiary of Vaxcel. At that time Zynaxis was a publicly-held biotechnology company engaged in the development of certain vaccine technologies. The transaction was approved by the Zynaxis stockholders at a meeting held on May 21, 1997 and was consummated as of that date.
Under the terms of the agreement all of the outstanding shares of
Zynaxis were converted into shares of Vaxcel based upon certain exchange ratios defined in the agreement, resulting in the issuance of an aggregate of 1.4 million (12.5%) of the outstanding (post-merger) shares of Vaxcel common stock (at $2.91 per share) to former Zynaxis stockholders at the date of closing. The merger was treated as a purchase by Vaxcel and constituted a tax-free reorganization for Zynaxis stockholders. The results of operations of Zynaxis are included in the Statement of Operations since May 21, 1997.
Pursuant to the agreement, CytRx was to provide up to $2 million to
Zynaxis under a secured credit facility during the period prior to closing of the merger, at which time the outstanding principal and interest was to be contributed to the capital of Vaxcel, together with additional equity in the amount of $4 million less the outstanding principal and interest of the secured note. At the time of closing the outstanding principal and interest of the secured note to Zynaxis was approximately $1.7 million, resulting in a net cash
infusion from CytRx to Vaxcel of approximately $2.3 million. In addition, at the date of closing, Vaxcel issued to CytRx a one-year warrant entitling CytRx to purchase a number of shares of Vaxcel common stock equal to the amount of capital which may be necessary for Vaxcel to satisfy requirements for inclusion in the Nasdaq SmallCap Market, divided by one-half of the $2.91 per share
transaction price at the date of closing.
In accordance with the provisions of APB Nos. 16 and 17, all
identifiable assets acquired, including identified intangible assets and liabilities assumed, were assigned a portion of the purchase price based on their respective fair values. The fair values of the acquired developed technology and incomplete research and development were determined based on an independent appraisal
Joe PTG&LI !!! |
