November 18, 2005, Toronto, Canada - Cita NeuroPharmaceuticals Inc. (“Cita”), announced this morning that it has agreed the sale of its entire share capital to Vernalis plc, of Winnersh, UK. Vernalis will pay an initial consideration of U.S.$29.5 million, payable in Vernalis shares and assume certain of Cita’s liabilities. Vernalis will also pay deferred consideration in installments of up to U.S.$35 million in either shares or cash (at Vernalis’ option) dependent upon achieving certain milestones in respect of the development of Cita’s clinical drug candidates CNP1512 and CNP3381. A total of £15.3 million (U.S.$26.2 million) of the initial share consideration has been conditionally placed outside of the United States with certain institutional investors in order to realize cash proceeds for certain of Cita’s shareholders. This transaction, along with Vernalis’ intention to raise approximately £42.7 million (U.S.$73.2 million) in a Placing and Open Offer, is subject to Vernalis shareholder approval and is expected to complete on December 14 2005.
“We are pleased to have concluded this transaction with Vernalis,” said Anthony Giovinazzo, Chief Executive Officer of Cita. “Our CNP1512 Parkinson’s drug candidate, entering Phase III clinical trials, gives Vernalis a broader and more mature development pipeline in its key area of neurology and CNS disorders. Vernalis is also building a specialty pharmaceutical commercialization capability in the form of a sales force in the US.”
“We are pleased to announce both the acquisition of Cita and the strong support from our existing shareholders and new investors to raise £42.7 million and take up a further £15.3 million in a Vendor Placing,” said Simon Sturge, Chief Executive Officer of Vernalis. “This, in addition to the recent acquisition of Apokyn® for the treatment of Parkinson’s disease, gives the Company a broadened portfolio of products on the market and in clinical development and is a major step forward in Vernalis' strategy to become a self funded CNS focused Company. It is now our intention to focus on progressing the current portfolio of compounds in development and to drive product sales. We do not envisage undertaking further corporate transactions in the near future and anticipate that our next major news will come in the form of data from our Phase III safety trial with frovatriptan for the short term prophylaxis for menstrually related migraine, with the confirmatory efficacy data and subsequent filing expected in the first half of next year.”
Dr. Luc Marangère, Managing General Partner and Lead Manager of the Vengrowth Advanced Life Sciences Fund, the major venture investor in Cita, commented, “It is very satisfying to see the validation of the value and potential of Cita’s assets, by Vernalis. The management team, lead by Anthony Giovinazzo, has continued to add value to the company by progressing Cita’s two lead projects and has delivered on Vengrowth’s investment model.”
Banc of America Securities LLC acted as financial advisor to Cita on this transaction.
CNP1512 is an innovative, patented effervescent formulation combining levodopa methyl-ester, a more soluble form of levodopa, and carbidopa which is expected to start Phase III trials in H2 2006. Based on clinical evidence, CNP1512 may reduce the periods of time patients suffer from the debilitating effects of Parkinson’s disease, as well as providing a more effective method of delivering the drug. 18 small clinical trials, including two European Phase II clinical trials and a proof of concept study have been completed involving levodopa methyl-ester alone or as part of CNP1512. In these trials, 696 volunteers and patients have received the drug without any significant safety or tolerability issues. These trials achieved statistical significance in respect of the trials’ primary endpoint, being faster onset of action (8.5 minutes faster activity per dose in patients with 1 or 2 times per day dosing), increased mobility time after each dose (15.4 minutes less OFF time per dose in patients with 1 or 2 times per day dosing), improved reliability of drug response compared to current levodopa-based drugs (important in patients with gastrointestinal dysfunctions) and increased water solubility resulting in an easier mode of administration (effervescent tablet that dissolves in 3 tablespoons of water). The trials supported regulatory approval for the drug in Italy when Chiesi Farmaceutici, Cita’s licensor, obtained a marketing registration for the drug for Parkinson’s disease patients experiencing motor fluctuations. CNP1512 is currently marketed in Italy for rescue (fast onset) in Parkinson’s disease.
CNP3381 is a novel drug candidate that is being developed for neuropathic pain. It is believed CNP3381 may have a dual mechanism of action, that of an NMDA antagonist and a MAO-A inhibitor, that controls pain in both the peripheral and central nervous systems, leading to the ability to reduce both pain signal transmission and the conscious perception of pain without many of the limitations and side effects of existing treatments. CNP3381 has undergone preclinical and clinical studies in which it was determined to be safe and well-tolerated. In two proof of concept studies involving a total of 47 subjects, CNP3381 achieved a reduction of the area and intensity of pain reported by volunteers in a model of neuropathic pain. Neuropathic pain is an area where existing therapies may be unsatisfactory due to non-responders, low efficacy or side-effects. A clinical maximum tolerated dose study in healthy volunteers in Canada has been completed in order to establish the dose range for Phase II clinical trials. An open Investigational New Drug (IND) Application has been opened with the FDA and Vernalis plans to initiate a Phase II clinical trial of CNP3381 in diabetic neuropathic pain patients in H1 2006.