LCT buys drug delivery technology

Biotech company Living Cell Technologies has entered into a letter of intent to buy intellectual and property rights to "tea bag"-like cell replacement therapy devices from US companies Theracyte and Baxter.

LCT managing director David Collinson said the technology, which took a decade and US$90 million ($122 million) to develop, provided exciting product opportunities.

"The acquisition will add significantly to LCT's product pipeline as well as our patent portfolio giving us world-wide protection on the use of live cells in a wide range of therapeutic devices."

The technology covers a family of small, thin, pillow-shaped devices which can be filled with cells and placed under the skin to deliver drugs to treat a range of diseases.

Assets to be transferred include a significant patents portfolio, inventory and a client base with potential for collaboration on treatments for multiple sclerosis, cancer and diabetes.

The technology was initially developed by Baxter before being spun off to a stand-alone cell therapy company, Theracyte.

The letter of intent provides for a cashless transfer of assets in return for which Theracyte shareholders, including Baxter, will receive 300,000 shares in LCT and royalties on sales.

Trading at 38Ac a share, the issue was valued at A$114,000 ($123,245).

In addition to this, three million options to buy unissued LCT shares will depend upon regulatory approval for the first Theracyte product.

The application device itself has previously been approved by the US Food and Drug Administration for cell application.

LCT medical director Bob Elliott describes the device as a semi-permeable, bio-acceptable tea bag with potential for diseases where only a small number of cells are needed.

"We have good reason to believe that the lack of success in the past isn't related to the inadequacy of the device design. It's been the type of cells and applications it's been used for."

Elliott believes by unifying scientific development and control of application technology, the market for the device could be substantial.

"Being an academic, I know we're a stingy lot. We'll buy one batch of these things and pay the least amount of money we possibly can.

"If we have control of the devices then, clearly, we are more inclined to push these projects along."

Although LCT, formerly Diatranz, moved its head office to Australia and subsequently listed on the ASX last September 1, most of its 40 staff are still based in New Zealand.

LCT has three products under development - NeurotrophinCell for Huntington's, Fac8Cell for haemophilia and DiaBCell for diabetes.

What are 'tea bags'?

* The technology involves small, thin, pillow-shaped devices filled with cells.
* They are semi-permeable and bio-acceptable 'teabags'.
* They can be placed under the skin to deliver a range of drugs.
* Use of the device has been approved by the FDA.