Cerylid, Kinacia to merge

Melbourne biotech Cerylid Biosciences has acquired fellow unlisted biotech Kinacia in a merger that finally puts an end to months of rumour.

The combined entity, which will continue under the name Cerylid, will have a healthy drug pipeline including two candidates scheduled to enter Phase I trials next year.

It's the latest in a steady stream of mergers and acquisitions in the industry in the last couple of months, and the first between two major players among the unlisted sector of the industry.

Cerylid CEO Dr Jackie Fairley said there were a number of reasons driving the merger, including achieving critical mass in the company's drug candidate pipeline and management experience.

"The most important one is really the synergies created by it -- the two companies have complementary skills and technology capabilities," she said. "Cerylid has excellent drug screening capabilities, while Kinacia has medicinal chemistry and drug development. And both companies are focused on small molecule drug development."

The two pre-clinical candidates include Cerylid's novel anticancer drug CBL316, which in animal studies has demonstrated equivalent efficacy to Taxol, and Kinacia's antithrombotic KN309, which has been shown in animal studies to inhibit blood clot formation without causing bleeding.

"There is quite a lot of interest in our lead compounds -- with the critical mass and additional experience [brought by the merger] we can drive them forward better than either company would be able to do on their own," Fairley said.

Kinacia also brings with it a substantial pipeline in the form of a library of more than 350 synthetic PI3 kinase inhibitors, which will complement Cerylid's pipeline of bioactive compounds with anti-cancer properties. PI3 kinase has been linked to a variety of diseases including inflammation and cancer, and several of the inhibitors in the library have shown selective activity against forms of PI3 kinase associated with specific disease states.

"Kinacia has several [international] collaborations -- with both companies and academic institutions -- on this already," Fairley said. "These collaborations show the level of interest in the compounds."

With $10 million in cash and a revenue stream from Cerylid's pharmaceutical screening business, the company is not likely to need to approach the capital markets for 12-18 months, although Fairley did not rule out listing the company on the ASX down the road.

"It provides us with rather more runway than other companies without revenues," she said. "We plan to continue our partner discovery program at similar levels to what we have had for the last couple of years."

Fairley said that Kinacia's staff had completed their move into Cerylid's facilities, and integration of the two companies was almost complete. Kinacia's CEO Ken Windle will assume the role of chairman in the company's board of directors while Fairley will remain CEO.

The major investors in the combined company are Amrad Corporation, Goldman Sachs JB Were, Australian Bioscience Trust, Development Australia Fund, JAFCO Investment (Asia Pacific), and Coates Myer & Company.