Interest in the cell line technology - Chromos' main source of revenue - was stimulated in mid-2006 when one of the company's US licensees, Pfizer, released some "very impressive" data illustrating the benefits of the ACE System, noted vice-president and chief financial officer Jeff Charpentier.
The IBC International Cell Line Development and Engineering Conference in San Diego heard that cell lines engineered with the ACE System to express a Pfizer monoclonal antibody achieved yields of more than 4g/L in a non-optimised bioreactor system, a four-fold improvement over the US company's original cell line.
In the meantime, discussions with potential clients have been eased by new partnerships and funding arrangements that should put Chromos on a more stable financial footing. The latest of these, announced last week, is an agreement with an underwriting syndicate led by Dundee Securities Corporation for a bought deal private placement to raise gross proceeds of C$ 4m (€2.6m). In the offering scheduled to close around 6 April, the underwriters have agreed to purchase 40,000,000 units from Chromos on a bought deal basis for C$ 0.10 per unit.
Each of the units consists of one share of Chromos common stock plus one common share purchase warrant. The warrants may be exercised to acquire an additional common share of Chromos at a price of C$ 0.15 per share for 60 months after closing.
An indication of Chromos' precarious financial state is that the company is seeking, on the basis of "financial hardship," an exemption from the requirement to solicit shareholder approval for the private placement. The company's board of directors cleared the offering after determining that Chromos was in "serious financial difficulty," it noted. Announcing a bridge loan financing arrangement for C$ 2m last October, Chromos said that, together with existing funds and revenues, it expected to be able to support its operations only until the first quarter of 2007.
Despite the declared rationale for the private placement, Chromos' financial picture is starting to look a little brighter. One significant factor has been a preliminary agreement, announced earlier this month, with an undisclosed US biotechnology company for the co-development of CHR-1103, Chromos' monoclonal antibody for the treatment of multiple sclerosis. Under the proposed collaboration, the US company will pay Chromos $3m upfront, once definitive agreements are signed, plus future milestone payments. A US Investigation New Drug (IND) application for CHR-1103 in the acute treatment of relapse in MS is now expected to be filed at the beginning of next year.
The financial benefits of this collaboration, coupled with adverse market conditions, persuaded Chromos to set aside a previously announced (in February) private placement to raise around C$ 8m, in favour of the less ambitious bought deal offering.
According to Charpentier, the collaboration on CHR-1103, coupled with incoming revenues and the offering proceeds, should now carry the company through to 2008. It has also assuaged concerns about Chromos' financial viability in a "number of discussions" with potential licensees for the ACE System.
Chromos has already in the last few months extended its range of partners for the cell engineering technology - which, in addition to Pfizer, included Centocor, Cambridge Antibody Technology and Y's Therapeutics - to include Genitope and Pain Therapeutics. There may be further partnership announcements in the second quarter, Charpentier predicted.
With the new funds coming in from the private placement, Chromos should be able to take on around five more employees to support the business expansion, he added - a not insignificant number for a company with a current staff of around 25. In terms of serving customers, Charpentier commented, the cell engineering operation is "very scaleable."
