Prima receives first payment from Arthron sale

Prima Biomed (ASX:PRR) has received the first payment of US$500,000 from Toronto-based immunology company Trillium Therapeutics following the settlement of the sale of Prima's subsidiary Arthron.

Prima also received 1.2 million Trillium shares, representing 7 per cent of the privately listed company's shares currently on issue, as per the terms of the sale agreement entered into in October 2005.

"We have successfully divested a non-core asset and found a partner who has resources, management, R&D, a great deal with Genentech, and is very focused on the area," said Prima executive chairman Eugene Kopp. "It also means that we've got some cash, we're saving money and we've got equity in one of the fastest growing privately owned companies in Canada."

Trillium's CEO Dr Niclas Stiernholm said that Trilliumhad been looking to add to its pipeline following a lucrative deal with Genentech and that he was attracted to Arthron's science, intellectual property and third party relationships.

"Australia has world class research in the immunology field," said Stiernholm.

Prima will receive further cash and Trillium shares as the Canadian company achieves milestones relating to the deals signed by Arthron with AstraZeneca and ZymoGenetics, which were acquired by Trillium as part of the sale.

Arthron signed a deal with ZymoGenetics in December 2004, reportedly worth as much as US$20 million, and in October 2004, signed a non-exclusive license with AstraZeneca. Both deals were for anti-inflammatory therapeutics which act at the FcyRIIa receptor.

"A big part of our strategy is to have an internal program pipeline as well as a partnering program, so we feel that we got a headstart here with ZymoGenetics and AstraZeneca already being on the scene," said Stiernholm. "We look forward to develop that into solid, long-term relationships."

If ZymoGenetics elects to extend into the second and final year of its option period to evaluate Arthron's Fc receptor technology in December, Prima will receive an additional cash payment of US$75,000 from Trillium.

Prima will also receive additional equity in Trillium if ZymoGenetics and AstraZeneca execute licenses or if Trillium progresses any product from either the prospective licensees or its own in house development program to phase I clinical trials.

If all milestones are achieved Prima could acquire a 19 per cent equity holding in Trillium within four years, based on Trillium's current issued share capital, which has been valued by Prima's board at AUD$3.8 million. Kopp said that on a diluted basis, when all options and warrants outstanding were considered, Prima's potential holding was reduced to about 15 per cent.

"Trillium has been backed by venture capitalists and they will be looking for an exit in 2007-2008, with some indications that they will receive between US$80 million to $100 million," said Kopp.

Trillium has a pipeline of immunology products, including a autoimmune disease product, a monoclonal antibody for cancer treatment, a protein for transplantation related auto-immune disease, and will be announcing the in-licensing of another protein for gastrointestine inflammatory disorders, said Stiernholm. "We are well funded and have at least three years with the cash in the bank," he said.

AstraZeneca delays

In September 2005, Prima reported that the completion date for the validation study it was conducting for AstraZeneca had been extended due to difficulties in securing samples for testing.

"AstraZeneca agreed with us that they would take on the remainder of the work that we have commenced with them. That is likely to done by April and they have 60 days to elect or not on the back of those results," said Kopp.

Kopp said that the study may also finish earlier. "They put April in to be conservative," he said.