SMi stockholders could also receive a maximum of $15 million in additional consideration, payable in either cash or shares of CTI common stock, upon the achievement of certain regulatory milestones.
Under the terms of the agreement, SMi will continue to operate as a wholly-owned subsidiary of CTI, utilizing its genomic-based platform to guide development of CTI's oncology products, including Brostallicin.
Daniel D. Von Hoff, M.D., a founder of SMi, and currently Physician-in-Chief and Director of the Clinical Translational Research Division at the Translational Genomics Research Institute (TGen), as well as Chief Scientific Officer of U.S. Oncology, is expected to head CTI's strategic product portfolio committee. Richard L. Love, a founder of SMi and former founder and CEO of ILEX Oncology, is expected to join CTI's Board of Directors.
The acquisition remains subject to conditions to closing outlined in the merger agreement.
Key highlights of the acquisition include:
• Worldwide rights to Brostallicin, a DNA minor groove binding agent with proven anti-tumor activity and a favorable safety profile in more than 200 patients treated to date in clinical trials. Brostallicin is currently in phase II clinical studies.
• Leverages SMi's strategic affiliation with TGen, utilizing their genomic platform and high throughput capabilities to target a cancer drug's 'context-of-vulnerability' guiding clinical trials toward patient populations where the highest likelihood of success should be observed, thereby potentially lowering risk and shortening time to market.
• Brings a team of renowned cancer drug development experts and industry veterans with proven track record to CTI.
• Brostallicin fills CTI's clinical pipeline gap, with potential for market approval as early as 2010, following the potential launches of pixantrone and XYOTAX™ (paclitaxel poliglumex, CT-2103) which are expected in early and late 2009, respectively.
• Incremental operating expense from Brostallicin clinical development is expected to have minimal impact on burn rate.
"We expect Brostallicin and SMi will fit perfectly with CTI's effort to develop individualized cancer medicines where genomic targeting of specific populations of patients should increase the probability of clinical success and patient benefit, while at the same time offering us the potential to market an additional solid tumor indication product in the United States alongside our XYOTAX program with partner Novartis," commented James A. Bianco, M.D., President and CEO of CTI.
"SMi brings a strong team of people with extensive experience in drug development, including founder and visionary, Dan Von Hoff, and President and CEO, Jeff Jacob. We are excited to have Jeff and his team leading the Systems Medicine subsidiary guiding the development path of our current preclinical drug candidates and also providing CTI access to other potentially exciting cancer drugs for our portfolio or for out-licensing opportunities," Bianco continued.