XTL Biopharmaceuticals has entered into an asset purchase agreement with Bio-GAL for the rights to use a patent on recombinant erythropoietin.
The protein allows for the prolongation of multiple myeloma blood cancer patients' survival and improvement of their quality of life.
In accordance with the terms of the asset purchase agreement, XTL will issue Bio-GAL ordinary shares representing a little less than 50% of the current issued and outstanding share capital of the company. In addition, XTL will make milestone payments of approximately $10m in cash on the successful completion of a Phase II clinical trial.
XTL's co-CEO, David Grossman said that this was an exciting opportunity to acquire the rights for a potential treatment for a severe and incurable blood cancer.
"We at XTL are thrilled at this opportunity and expect to embark on a clinical trial with recombinant erythropoietin for the treatment of multiple myeloma in the near term and hope to lead it to a successful outcome," he said.
The company's board of directors may, in its sole discretion, issue additional ordinary shares to Bio-GAL in lieu of such milestone payment. XTL is also obligated to pay 1% royalties on net sales of the product.
The closing of the transaction is subject to various conditions including XTL's and Bio-GAL's shareholders' approvals, as well as completion of a financing. Closing is expected to take place in the second or third quarter of 2009.
By Daniel Garrun.