Isotechnika strikes strategic drug collaboration and financing deal with Paladin Labs
EDMONTON - Isotechnika Inc. (TSX:ISA), an Edmonton-based drug developer, announced Thursday a strategic investment and alliance with Montreal-based Paladin Labs Inc. (TSX:PLB) to commercialize Isotechnika's lead drug, in Canada, Mexico, Latin America, Israel and South Africa.
Under the deal, Paladin Labs will pay Isotechnika $7 million in cash immediately and $4.35 million in research and development funding over the next 12 months to further develop voclosporin, a treatment for psoriasis and for use in transplants.
The agreement also has the companies setting up a new drug subsdiary, Isotechnika Pharma Inc., that will be 81 per cent owned by current Isotechnika shareholders and 19 per cent by Paladin Labs.
Isotechnika will maintain its current listing on the Toronto Stock Exchange and senior managers of the company will continue with Isotechnika Pharma.
"The combination of this financing and share reorganization provides Isotechnika shareholders with a solid balance sheet to deliver on key milestones and business objectives," said Dr. Robert Foster, president and CEO of Isotechnika.
"We are pleased to be able to secure capital on favorable terms in such a difficult market, while retaining the rights to market voclosporin in the largest, most strategic markets, including the U.S., Europe, Japan and Asia. In the process we gain a strategic partner in Paladin Labs for key pharmaceutical markets, including Canada."
Jonathan Ross Goodman, president and CEO of Paladin Labs, said the deal will help commercialize Isotechnika's main product, voclosporin, for use as a psoriasis treatment and for transplants.
Psoriasis is a chronic skin disease characterized by dry red patches covered with scales and usually appears in the scalp and ears.
"With positive results from a recently completed Phase III trial in psoriasis, we intend to submit voclosporin for Canadian regulatory approval," Goodman said.
"We believe voclosporin will find a profitable niche in the Canadian market while providing benefit to psoriasis patients. We are also excited by the much larger market opportunity for voclosporin in the transplant indication."
The restructuring transaction is expected to be completed in June.
In another development Thursday, Paladin Labs reported its net profit more than doubled in the first quarter to $3.1 million or 20 cents a share from $1.5 million or 10 cents a share in the 2008 first quarter.
Revenue increased 53 per cent to $25.8 million from $16.8 million as the company benefited from the acquisition and launch of Dexedrine and the strong performance of its other key promoted drugs, including Tridural, Twinject, Seasonale, Plan B, Pennsaid and other treatments.
"We are very pleased with the continued strength of the business, with our promoted products, international business and new product acquisitions all driving growth," said Goodman.
In trading Thursday on the TSX, Isotechnika shares rose four cents to 19.5 cents, a jump of nearly 26 per cent. Paladin Labs shares rose $1.27 to $16.25, a gain of more than eight per cent.