Incara - OP2000 and Elan's involvment.
Incara (INCR) is a (very) small biotech company quoted on Nasdaq. Their present market capitalisation is about 17 mUSD. So, what is their business with Elan? From a PR issued in January 2001.
(10 minutes later). Hmmm! I just noticed that someone with the handle rickh48 comments on the company over at Yahoo!. But I suppose the interest is not OP2000-related. Might be another reason to look closer at the company, though.
Incara Finalizes Partnership with Elan to Develop OP2000
Research Triangle Park, N.C., January 29, 2001 – Incara Pharmaceuticals Corporation (Nasdaq:INCR) announced today that it has finalized a collaborative agreement with Elan Corporation, plc for OP2000, its subcutaneously administered ultra-low molecular weight heparin. Under the terms of the agreement, Incara will pursue the clinical development of OP2000 for the treatment of ulcerative colitis while utilizing Elan’s MEDIPADÒ Drug Delivery System. As part of the transaction, Elan purchased $4 million in equity of Incara at a premium to its current common stock price. Additional details can be found in Incara’s SEC filings.
"We are pleased to enter into this relationship with Elan for OP2000 and welcome them as a stockholder," said Clayton I. Duncan, CEO of Incara. "This collaboration provides Incara both a respected partner for OP2000 and an equity investment to help fund our other programs."
Incara will conduct a Phase 2/3 pivotal clinical study of OP2000 in patients with ulcerative colitis. The study will examine the effects of OP2000 in patients receiving standard treatment with aminosalicylates who have developed symptoms of active ulcerative colitis. This initial study will utilize prefilled syringes to deliver OP2000 by subcutaneous injection.
Incara’s OP2000, which is licensed from Opocrin S.p.A., of Modena, Italy for all countries other than Japan and Korea, will be evaluated with Elan’s MEDIPAD, a drug delivery technology which combines the convenience of a transdermal patch with the drug delivery capabilities of an infusion pump. The system is disposable, inexpensive and can be used to infuse drugs over up to a 48 hour time frame.
Ulcerative colitis is a chronic inflammatory disorder of the large intestine, of unknown cause, which is characterized by recurrent flares of abdominal pain, cramps, fever, fatigue, diarrhea and bleeding. Current treatments of ulcerative colitis are designed to reduce inflammation and relieve symptoms in addition to replacing lost fluids and nutrients. These include treatment with corticosteroids and aminosalicylates, often with unsatisfactory results. In serious cases, surgery may be required.
Incara Pharmaceuticals Corporation (www.incara.com ) is developing a diversified portfolio of proprietary therapies oriented to treatment of diseases afflicting large patient populations. In addition to OP2000, the Company’s current programs include liver stem and precursor cell therapy for the treatment of liver failure, and small molecule catalytic antioxidants for treatment of stroke and cardiac reperfusion injury.
And what about Elan's interests in the venture? Not surprisingly this is not a very straightforward scheme. From Incara's recent 10K.
In January 2001, we closed on a collaborative and financing transaction with Elan. As part of the transaction, Elan and Incara Pharmaceuticals formed a Bermuda corporation, Incara Development, Ltd., to develop OP2000. We own all of the common stock and 60.2% of the non-voting preferred shares of Incara Development and Elan owns 39.8% of the non-voting preferred shares of Incara Development. Of the outstanding combined common and non-voting preferred shares of Incara Development, we own 80.1% and Elan owns 19.9%. As part of the transaction, Elan and Incara Pharmaceuticals entered into license agreements under which we licensed to Incara Development the OP2000 compound and Elan licensed to Incara Development a proprietary drug delivery technology.
As part of the transaction, Elan purchased 825,000 shares of Incara Pharmaceuticals' common stock, 28,457 shares of Incara Series B non-voting convertible preferred stock and a five-year warrant to purchase 22,191 shares of Series B preferred stock at an exercise price of $72.12 per share for an aggregate purchase price of $4,000,000. Each share of Series B preferred stock is convertible into ten shares of our common stock.
Elan also purchased 12,015 shares of Incara Series C convertible exchangeable non-voting preferred stock with a face value of $1,000 per share, or a total of $12,015,000. Incara Pharmaceuticals contributed to Incara Development the proceeds from the issuance of the Series C preferred stock to Elan in exchange for its securities of Incara Development. Elan also contributed $2,985,000 to Incara Development for its shares of preferred stock of Incara Development. In addition, Elan granted Incara Development a license to Elan's proprietary drug delivery technology for a license fee of $15,000,000.
The Series C preferred stock bears a mandatory stock dividend of 7%, compounded annually. The Series C preferred stock is exchangeable at the option of Elan at any time for all of the preferred stock of Incara Development held by Incara Pharmaceuticals which, if exchanged, would give Elan ownership of 50% of the initial amount of combined common and preferred stock of Incara Development. After December 20, 2002, the Series C preferred stock is convertible by Elan into shares of our Series B preferred stock at the rate of $64.90 per share. If the Series C preferred stock is outstanding as of December 21, 2006, we will exchange the Series C preferred stock and accrued dividends, at our option, for either cash or shares of our stock and warrants having a then fair market value of the amount due.
Upon the completion of enrollment of a Phase 2/3 clinical trial for OP2000, Elan will purchase $1,000,000 of our Series B preferred stock at a per share price that will be ten times the greater of (1) the average per share price of Incara Pharmaceuticals common stock for the day prior to the purchase, or (2) a 25% premium to the average daily price per share of Incara Pharmaceuticals common stock for the 60 trading day period immediately prior to the purchase. In addition, as part of the payment, we will issue to Elan a five-year warrant for 20% of the shares of Series B preferred stock purchased by Elan at that time. The exercise price of the Series B preferred stock under this warrant will be equal to twice the per share purchase price of the Series B preferred stock purchased on the same date. However, if the purchase price of the Series B preferred stock is less than $8.00 per share, the purchase of this stock will be limited to 150,000 shares of Series B preferred stock and will be at Elan's option.
Elan and Incara Pharmaceuticals intend to fund Incara Development pro rata, based on their respective percentage ownership of the combined outstanding common and preferred stock of Incara Development. Subject to mutual agreement, Elan will lend us up to $4,806,000 to fund our pro rata share of development funding for Incara Development. In return, we issued a convertible promissory note that bears interest at 10% compounded semi-annually on the amount outstanding thereunder. After December 20, 2002, the note is convertible at the option of Elan into shares of Series B preferred stock at $43.27 per share. The note will mature on December 21, 2006, when the outstanding principal plus accrued interest will be due and payable. We have the option to repay the note either in cash or in shares of Series B preferred stock and warrants having a then fair market value of the amount due. As of September 30, 2001, we had not borrowed any funds pursuant to this note. However, we borrowed $857,000 under the note in October 2001. |
