pSivida acquires US drug delivery company

Perth nano-biotech company pSivida (ASX:PSD; NASDAQ:PSDV; Xetra:PSI) has agreed to purchase privately owned US drug delivery company Control Delivery Systems (CDS) for US$104 million (AUD$139 million), as part of its on-going US growth strategy.

pSivida will fund the deal, which is expected to close in the fourth quarter of 2005, by issuing about 16 million American Depositary Shares to CDS shareholders, representing about 40 per cent of the combined company.

"This acquisition is an excellent opportunity for pSivida to capitalise on the combination of complementary technologies and skills," Gavin Rezos, managing director of pSivida, said in a statement.

The acquisition gives pSivida an operating base in the Boston biotech hub and access to the US scientific and investment communities.

"Gavin will be global CEO until a new global CEO is recruited within 12 months -- pSivida will retain its office in Perth with Gavin as CEO of Australian operations and managing the Australian listing. Paul Ashton will continue as CEO of US operations," said pSivida's investor relations manager, Brian Leedman.

pSivida initially announced its intensions to purchase an undisclosed drug delivery company following a trading halt in mid August. CDS currently has two marketed products -- Vitrasert for the treatment of an AIDS-related deteriorating eye condition, and Retisert for a sight-threatening inflammatory disease, uveitis, which is the third most common cause of blindness in the US. CDS has also initiated a phase III clinical trial to study the treatment of diabetic macular edema patients with fluocinolone acetonide using their drug delivery device, Medidur.

CDS had unaudited revenues of US$8 million for the year ended 30 June 2005, which does not include Retisert royalties because marketing of that product was only recently commenced by Bausch & Lomb.

"pSivida will greatly benefit from an expanded drug delivery product line that generates current and substantial near-term revenues from CDS' marketed products and with pSidivda's BrachySil, which is expected to reach market in 2007.

"BrachySil will enter phase IIb clinical trials in the second half of 2005 for the treatment of primary liver cancer and also phase IIa clincial trials for the treatment of pancreatic cancer tumors," said Leedman.

In the short to medium term the combined company, which will retain the name pSivida plans to capitalise on pSivida's BioSilicon and CDS's AEON drug delivery technologies to develop a series of products focusing on ophthalmology and oncology.

President and CEO of CDS, Paul Ashton, said in a statement: "We are particularly excited about the potential to integrate BioSilicon with our drug delivery technology platform to create next generation treatments for a broad range of diseases and conditions."

Finalisation of fundamental terms, including the ultimate price and the approval of the US company and pSivida shareholders, is yet to be completed. The combined company will have a market capitalisation of AUD$333 million.