ChemGenex welcomes Cephalon as new investor

Melbourne cancer biotech ChemGenex announced today that US pharma Cephalon has become a major new investor in the company.

The announcement saw the company’s shares surge almost 15 percent to $0.50 by mid afternoon trade.

Under the terms of the agreement Cephalon has agreed to subscribe for up to A$15 million of convertible notes. The notes are convertible at A$0.50 per ChemGenex share, a 13 percent premium to the volume-weighted average price for the one month period to 15 October 2010.

In addition Cephalon has reached option agreements with exsting ChemGenex shareholders , Stragen International N.V. (Stragen) and Merck Santé S.A.S (Merck), giving it the right to buy up to 19.9 percent of outstanding ChemGenex shares.

ChemGenex said that $10 million of the $15 million convertible notes would be drawn down immediately to fund company operations next year, in particular the collection and analysis of patient data required for the company to complete its NDA submission to the FDA for the use of omacetaxine to treat chronic myelogenous leukemia (CML) patients who have failed two or more tyrosine kinase inhibitor (TKIs).

“We are delighted that Cephalon has indicated its interest in ChemGenex and omacetaxine by becoming a substantial investor,” said Dr Greg Collier, managing director and CEO of ChemGenex.

“The company is at a pivotal stage in its development, pending the collection of data to allow it to proceed with its new NDA to the U.S. FDA for omacetaxine for the treatment of CML patients who have failed two or more TKIs.”

Earlier this month ChemGenex said that the FDA has agreed to receive its NDA based on combined data from the company’s two pivotal studies, Study 202 and Study 203, without the need for any further clinical testing.