Medica to take over subsidiary Cytopia

Brisbane-based pooled development fund Medica Holdings (ASX:MCA) is committing body and spirit to the drug-discovery race by taking a 100 per cent shareholding in its Melbourne subsidiary Cytopia -- and adopting Cytopia's name.

The new company, to be known as Cytopia Limited, will focus on developing its promising cancer drug candidate, whose potency in animal models of lymphoma, leukaemia and prostate cancer indicates high potential for a broad-spectrum cancer therapy.

Medica MD Dr Kevin Healey said the compound had "enormous commercial potential". Healey told this week's Citigroup Smith Barney health group conference that the company had already reached agreement of Cytopia's remaining shareholders to lift his company's current investment from 81 per cent to full ownership.

Healey also flagged Medica's intention to exit its shareholdings in its other two subsidiaries, Brisbane-based carbohydrate drug-developer Alchemia (ASX:ACL) and Xenome, which is developing drugs based on animal venoms to treat neurological disorders. Medica holds 14.4 per cent of Achemia, and 24.8 per cent of Xenome.

The Medica board will seek the endorsement of its shareholders for the proposals at an extraordinary general meeting before June 30.

In an statement guaranteed to galvanise the attention of the dozen-odd other Australian and New Zealand companies with promising cancer therapeutics, Healey said Medica would "also consider other local and international mergers and acquisitions to maximise growth opportunities".

Shareholders in pooled development fund (PDF) companies are exempt from paying tax on profits or the sale of shares.

Healey said the company would ascertain whether it was appropriate for Cytopia to maintain its PDF status, in the interests of the company, or if required, to relinquish it.

He said Medica, as Cytopia's founder and majority shareholder, had exerted significant influence over its development, and the board had embarked on the new strategy as a way of growing its value to shareholders.

He said Cytopia's broad-acting anti-cancer drug candidate was now in pre-clinical studies, preparatory to the company seeking approval for human clinical trials later this year.

Healey said the experimental drug has "enormous commercial potential" as a broad-spectrum anti-cancer drug -- greater than that of multi-billion dollar chemotherapeutics like Taxol and vincristine.

On early indications, it is not susceptible to the drug- resistance problems that allows cancerous cells to evade many mainstream drug therapies, and spawn secondary cancers. Its low toxicity could also allow it to be delivered orally.

If the cancer drug is Cytopia's commercial ace, its hand is filled out with JAKs -- a unique family of kinases, intracellular signalling molecules with key roles in inflammatory disease. Cytopia has identified several JAKs involved in the untreatable and lethal lung inflammatory disease, chronic obstructive pulmonary disorder (COPD), which is predicted to become the four most prevalent killer disease in the world by 2020.

The company has also developed a number of synthetic inhibitors of JAKs that show therapeutic promise for congestive heart failure -- a $7 billion target in the US alone -- and pulmonary hypertension, or high pressure in the blood vessels supplying the lungs.

Cytopia has developed a highly specific inhibitor of the JAK3, that offers a potentially novel alternative to conventional anti-inflammatory drugs and antibody therapies.

The company is already discussing an evaluation agreement covering several inflammatory diseases with a major pharmaceutical company.

It is also entering into a collaboration with New York-based biomedical company Myomatrix to develop its JAK2 kinase inhibitors for cardiovascular applications.

Healey said the Medica board's view of the promise of Cytopia's candidate drugs was shared by external experts. "We are collectively very excited about the prospects, and therefore wish to take steps to ensure Medica shareholders directly enjoy the benefits," he said.