Cyclacel and Xcyte combine to form international biopharma company

Cyclacel Group, of Dundee in Scotland, and US-based Xcyte Therapies have entered into a definitive agreement to combine the two companies. The transaction will create a publicly-traded international biopharmaceutical company with two clinical stage, mechanism-targeted, small molecule drug candidates in cancer, a third candidate expected to enter clinical trials in the second half of 2006 and a strong development pipeline.

The transaction is structured as an acquisition by Xcyte of all of the capital stock of Cyclacel, a wholly owned subsidiary of Cyclacel Group plc. The transaction is anticipated to close at the end of the first quarter of 2006 subject to certain customary closing conditions.

The new company, to be called Cyclacel Pharmaceuticals Inc. (CPI), intends to build upon what it believes to be Cyclacel's leading position in the area of cell cycle biology, with a portfolio of three orally-available, mechanism-targeted drugs that modulate the cancer cell cycle. Cyclacel's drug pipeline includes seliciclib (CYC202), a cyclin-dependent kinase (CDK) inhibitor in Phase II clinical trials for the treatment of non-small cell lung cancer; sapacitabine (CYC682), a nucleoside analogue in Phase I trials; CYC116, an Aurora kinase inhibitor in IND-directed preclinical development; and early stage programmes targeting important cell cycle mechanisms for the treatment of cancer, type 2 diabetes, inflammatory kidney diseases and viral infections.

Potential Milestones for 2006 for CPI include:

Initiation of a multicentre Phase IIb randomised clinical trial of seliciclib (CYC202) in the US for the treatment of patients with advanced non-small cell lung cancer, expected in the first half of 2006;

Initiation of a Phase Ib clinical trial of sapacitabine (CYC682) at a major US cancer centre in patients with advanced leukemias and myelodysplastic syndrome, expected in the first half of 2006; and

Filing of an Investigational New Drug application with the US FDA to begin Phase I clinical trials with CYC116, an Aurora kinase inhibitor, expected in the second half of 2006.

CPI will be headquartered in Short Hills, New Jersey and will maintain its research laboratories in Dundee, Scotland, and Cambridge, UK. It will not retain any operations at Xcyte's facilities in Seattle, Washington. The new company will be led by Spiro Rombotis, Cyclacel's current ceo, while Paul McBarron, Cyclacel's current chief financial officer, will become CPI's coo.

'The transaction will create an international public company with approximately $30m in cash, a franchise in one of the most exciting fields of biology and a development-stage portfolio of targeted oncology drug candidates affecting the cancer cell cycle,' said Sir John Banham, chairman of Cyclacel. 'We believe that cell cycle targeted drugs will become increasingly important in the modern treatment of cancer as a chronic disease. Cyclacel is well positioned to benefit from the increasing adoption of orally-active therapeutics for the long-term management of cancer patients.'