ExonHit mulls diagnostic takeovers

By Caroline Jacobs and Noelle Mennella

PARIS (Reuters) - ExonHit Therapeutics (ALEHT.PA: 株価, 企業情報, レポート) has hired a investment bank to screen the market for takeovers in the area of diagnostics where the French biotechnology company aims to become a mid-sized player.

In addition, ExonHit, which develops drugs and diagnostics tests, is hunting for partners for its two Alzheimer candidates -- one blood test that can diagnose the neurodegenerative ailment and one drug -- which are its most advanced products.

"2009 is an important year, there will be many announcements," Chairman Loic Maurel told Reuters on Tuesday during a biotech small- and mid-cap summit in Paris.

ExonHit seeks to grow into a mid-sized diagnostic company with sales of over 100 million euros ($142.1 million).

It wants to buy private or listed companies that are close to marketing a product but which due to the financial crisis are struggling for the means.

"Our focus is on the United States, but we are not at all closing the door for Europe," Maurel said. ExonHit has an office in Gaithersburg, Maryland in the United States and its foothold in the world's biggest drugmarket will facilitate its expansion.

More accurate diagnostics of a disease help ensure more effective treatment outcomes, saving lives and money. It takes two to four years to develop a diagnostics test compared with 10 years for a drug.

ExonHit's Alzheimer's diagnostics test EHT Dx21, to be launched in the fourth quarter, will be first made available to clinical trial research, and then for partnering for wider use with either a laboratories group or a diagnostics company.

For the EHT 0202 Alzheimer drug, Exonhit hopes to find a partner between now and the summer of 2010 to help it develop the treatment. Some 15 drugmakers have shown interest in the drug but Maurel said mid-stage Phase IIa clinical data due in the final quarter of this year, should whet appetite more.

Alzheimer's disease is the most common cause of dementia in the aging population. The World Health Organization in 2001 said the number of people suffering from the ailment could nearly double to 34 million by 2025.

SPLITTING MOLECULES

Founded in 1997 and listed in 2005, ExonHit focuses on alternative RNA splicing -- a natural process in the human body -- to develop blood-based diagnostic tests and treatments for cancer and neurodegenerative diseases.

RNA is ribonucleic acid, a type of molecule.

Through alternative RNA splicing a gene directs the production of proteins. However, the splicing can sometimes lead to abnormal proteins that trigger a disease or contribute to it.

ExonHit's DATAS technology helps identify these changes in splicing. The genes encoding the abnormal proteins can be used as therapeutic targets for new or existing drugs.

Maurel said the company was in talks with two companies, one European and on American, to sign agreements allowing them to use its technology along the lines of its U.S. partner Allergan (AGN.N: 株価, 企業情報, レポート), which uses it to develop neuropathic pain indications.

With its partner French diagnostics company BioMerieux (BIOX.PA: 株価, 企業情報, レポート) ExonHit is working on a blood test that can detect breast cancer. BioMerieux will publish data in September.

ExonHit has enough cash available -- 21 million euros at the end of last year -- to be able to run its business for more than two years, Maurel said, adding that it was "confident" a "good part" of its 9.4 million euros warrant issue would be exercised.

The issue was launched in December and ends on June 30.

ExonHit's net loss widened to 8.9 million euros last year, partly due to higher R&D spending, up 15 percent at 9.9 million, while revenues fell to 4.2 million euros.

ExonHit shares closed little changed at 3.56 euros on Tuesday and have gained nearly 30 percent this year. The company has a market value of 100 million euros.