Xenetic Biosciences Enters Into Asset Purchase Agreement

Xenetic Biosciences, Inc. recently announced it has entered into an Asset Purchase Agreement with AS Kevelt and OJSC Pharmsynthez. Pursuant to the APA, the Sellers will transfer to the company certain intellectual property rights with respect to Virexxa, and the company will receive the worldwide rights to develop, market, and license Virexxa for all uses, except for certain excluded uses within the Commonwealth of Independent States, in exchange for 111.5 million shares of company common stock and certain other consideration.

Virexxa is a Phase II oncology drug candidate, which is under investigation for the treatment of certain endometrial cancers. As part of this total consideration, the company will also acquire Kevelt’s US Orphan Drug designation for the use of Virexxa in the treatment of progesterone receptor negative endometrial cancer in conjunction with progesterone therapy.

The APA also contains a financing component wherein the company will receive from Pharmsynthez up to $3.5 million in bridge financing and a commitment of an additional $6.5 million in financing as part of a planned capital raise of at least $15 million and up-list to a national securities exchange.

“This transaction provides us with our first US FDA IND-enabled clinical candidate for an orphan cancer indication,” said M. Scott Maguire, Chief Executive Officer of Xenetic Biosciences. “Virexxa with orphan designation in the US adds to our Phase II portfolio, which also includes ErepoXen, our long-acting anemia drug candidate. As well as expanding our pipeline, the company is pleased to receive financial commitments of up to $10 million to fund our further development, as well as financial commitments to back our planned uplisting to a national securities exchange, an objective that remains a priority for the company’s board.”

Virexxa (sodium cridanimod) is a small-molecule immunomodulator and interferon inducer, which, in preliminary studies, has been shown to increase progesterone receptor (PrR) expression in endometrial tissue. Restoration of PrR expression may re-sensitize endometrial tumor tissue to progestin therapy in previously unresponsive tumors. Virexxa is under investigation in a US FDA IND-enabled Phase II open-label, multi-center, single-arm study of sodium cridanimod in progesterone receptor negative recurrent or persistent endometrial carcinoma. This study will investigate the effect of sodium cridanimod on the levels of PrR in tumor tissue and how this effect correlates to a patient’s clinical response to progestin therapy.

Endometrial cancer is the most common gynecological malignancy and represents a major health concern, as overall 5-year survival rates have not improved over the past 3 decades. Endometrial cancer patients whose tumors no longer express progesterone receptors are not candidates for progestin-based therapy. Virexxa may improve sensitivity to progestin therapy in subjects with advanced or recurrent PrR-negative tumors. For more information: clinicaltrials.gov/show/NCT02064725

Xenetic Biosciences, Inc. is a biopharmaceutical company developing next-generation biologic drugs and novel oncology therapeutics. Xenetic’s proprietary drug technology platforms include PolyXen, designed to develop next-generation biologic drugs by extending the efficacy, safety, and half-life of biologic drugs, and OncoHist for the development of novel oncology drugs focused on orphan indications.

Xenetic’s lead product candidates include ErepoXen, a polysialylated form of erythropoietin (EPO) for the treatment of anemia in pre-dialysis patients with chronic kidney disease, and OncoHist, a novel recombinant human histone H1.3 molecule for the treatment of refractory Acute Myeloid Leukemia (AML) with potential to treat numerous other cancer indications. Xenetic is collaborating with Russian-based OJSC Pharmsynthez (who is an affiliate of a significant shareholder in Xenetic) and the Serum Institute of India to test additional drug candidates and to de-risk the development process with clinical data generated in Russia and India before Xenetic takes these candidates into the clinic in the Western markets.

Xenetic is also developing a broad pipeline of clinical candidates for next-generation biologics and novel oncology therapeutics in a number of orphan disease indications. For more information, visit www.xeneticbio.com and connect on Twitter, LinkedIn, Facebook and Google+.

Xenetic is working together with Baxalta Incorporated (formerly Baxter Healthcare) to develop a novel series of polysialylated blood coagulation factors, including a next- generation Factor VIII. This collaboration relies on Xenetic’s PolyXen technology to conjugate PSA to therapeutic blood-clotting factors, with the goal of improving the pharmacokinetic profile and extending the active life of these biologic molecules. Baxalta is one of the company’s largest shareholders having invested in a number of rounds with the most recent investment of $10 million last year. The agreement is an exclusive research, development, and license agreement, which grants Baxalta a worldwide, exclusive, royalty-bearing license to Xenetic’s PSA patented and proprietary technology in combination with Baxalta’s proprietary molecules designed for the treatment of blood and bleeding disorders. Under the agreement, Xenetic may receive regulatory and sales target payments for total potential milestone receipts of up to $100 million plus royalties on sales.