Today, Cephalon, Inc. (Nasdaq: CEPH) announced the signing of a convertible note subscription agreement with ChemGenex Pharmaceuticals Limited (ASX: CXS), an Australian-based oncology focused biopharmaceutical company. Under the terms of the agreement, Cephalon will provide up to A$15 million to ChemGenex in return for a note that is convertible at A$0.50 per share. This funding will support ChemGenex operations, including clinical activities to complete a planned New Drug Application submission to the U.S. Food and Drug Administration for omacetaxine for the treatment of chronic myelogenous leukemia (CML) patients who have failed two or more tyrosine kinase inhibitor (TKIs). Separately, Cephalon also entered into option agreements with two of ChemGenex's major shareholders, Stragen International N.V. and Merck Sante S.A.S. Under those option agreements, Cephalon has the right to acquire up to 19.9 percent of ChemGenex's outstanding shares at A$0.70 per share.
"Our deal with ChemGenex allows us to provide the necessary resources to support the completion of a clinical and regulatory pathway for omacetaxine for CML patients facing a critical unmet medical need," said Kevin Buchi, Chief Operating Officer at Cephalon.
Cephalon has the right to exercise the options before the later of March 31, 2011, and ten business days after receipt of certain clinical trial data and related analyses from ChemGenex (the "Exercise Period"). Cephalon has the right to convert the notes to ChemGenex shares at any time, subject to ChemGenex shareholder approval (to be sought by December 31, 2010) for conversion during the Exercise Period or if the options are exercised. Cephalon will determine whether to exercise its rights under any or all of the agreements following receipt and review of the ChemGenex data and analyses.