OREANDA-NEWS. December 6, 2011. RUSNANO has announced the acquisition of 41.37 percent of owners’ equity in project company SynBio. RUSNANO paid 900 million rubles for the share as part of an earlier signed investment agreement whose participants include the Human Stem Cells Institute, Pharmsynthez, Cryonix, FDS Pharma LLP (United Kingdom), and Pharmsynthez’s chairman Dmitry Genkin as a private investor .

The project is an outstanding example of Russian-British and Russian-German collaboration in innovative pharmaceuticals. Project company SynBio has headquarters in Moscow and via this agreement will have a controlling interest in research laboratories in the United Kingdom and Germany.

Taking the project into the international market, SynBio acquired a controlling interest (50.24 percent) in Xenetic Biosciences PLC (AIM: XEN.L) for ?12.8 million. As a result, for the first time a Russian company has become the initiator in establishing a new, powerful player in the innovative pharmaceuticals and biotech markets. The acquisition of a controlling packet of shares in Xenetic Biosciences will allow SynBio to capitalize operating expenses and in so doing increase the total capitalization of the project company.

Transaction terms call for exchanging royalties between the companies. SynBio will hold exclusive rights to sell in Russia and part of the CIS all preparations that are developed and to receive 10 percent of Xenetic’s sales worldwide on most product candidates under joint development. For its part, Xenetic will receive 10 percent of SynBio’s sales in Russia and part of CIS.

Xenetic Biosciences is a developer of innovative medications and next generation biologic drugs. The company works closely with leading global pharmaceutical companies. For example, Xenetics cooperated with Baxter International Inc. to develop a series of drug candidates to treat hemophilia-blood-coagulation factors conjugated with polysialic acid. Baxter will remain one of Xenetic’s largest shareholders behind Rusnano and Serum Institute of India, India’s largest biotech company and one of world’s largest vaccine manufacturers.

Currently SynBio is developing nine drug preparations based on three technological platforms. Eight of them will be developed in cooperation with Xenetic Biosciences using two technological platforms:

Products with prolonged activity using polysialiac acid-medications in the biobetter class for treatment of diabetes mellitus, Alzheimer’s disease, chronic kidney disease, and other illnesses (the PolyXen® platform). In this project, PolyXEN technology is used to create long-acting and more effective medications based on recombinant human therapeutic proteins and polypeptides (epoetin alfa, insulin, interferon alfa, granulocytic growth factor, and somatotropic hormone).

Preparations based on intranuclear human protein histone H1 for treatment of cancers and other illnesses (the Histone platform). Two promising drug candidates are designed to treat rare blood cancers (leukemia, lymphoma, and myeloma) and ischemic diseases. Modified recombinant human histone is the sole component used to create the anti-leukemia drug and in a protein/nucleic acid complex to improve delivery of gene therapies.

All drugs and preparations in the portfolio are already undergoing study. Two have passed the first phase of clinic trials (safety, pharmacokinetics, and pharmacodynamics). Still another has passed phase IIa (collation of dose).

SynBio is conducting research not only in Russia. Its work with Xenetic is going on abroad, which is vital to the drugs entry into international markets. A histone-platform drug for acute leukemia passed phase I in Germany and is now going through IIb studies in Russia. (A similar pattern of phase II clinical study is underway for a drug to treat non-Hodgkins lymphoma.) A second drug, prolonged erythropoietin for treatment of kidney failure, has completed phase IIa trials in India.

“This transaction is an important step in the development of our domestic pharmaceuticals and biotech industry,” noted RUSNANO Managing Director Olga Shpichko. “For the first time, a RUSNANO project company has been the initiator in establishing a new, powerful player in the global innovative pharmaceuticals market.”

As provided in the agreement between SynBio and Xenetic Biosciences, two new members have been nominated to the Board of Directors of Xenetic Biosciences: Roman Knyazev (Senior Investment Manager, RUSNANO) and Dmitry Genkin (chairman of the Board of Directors, Pharmsynthez).