EPIX hires consulting firm to identify acquisition target, puts attorney on staff to assist in transaction

By E. Janene Geiss

Philadelphia, Dec. 16 - EPIX Pharmaceuticals, Inc. announced Friday that it had hired an interim general counsel and a health care consulting firm to assist in a potential acquisition of a smaller biotherapeutics company - just days after laying off half of its staff.

Philip Chase has joined the company as interim vice president and general counsel with primary responsibility for overseeing the acquisition process, according to a company news release.

Health Advances, LLC, a Weston, Mass., strategy health care consulting firm, has been hired to assist the company in commercial market analyses of the candidate companies EPIX is evaluating for acquisition, officials said.

The company's recent actions are in an effort to transform itself into a specialty pharmaceutical with a decreased focus on imaging products related to Magnetic Resonance Imaging (MRI) technology.

The company uses its proprietary Target Visualization Technology to create imaging agents targeted at the molecular level, designed to enable physicians to use MRI to obtain detailed information about specific disease processes.

Most recently, the company has been working toward approval of its blood-pool contrast agent Vasovist, but the U.S. Food and Drug Administration said recently that it would require more studies. EPIX also has a second imaging product candidate.

"The FDA is being difficult in this area," said company spokeswoman Amy Seltzer Hedison.

She said the imaging market is small and doesn't offer many more opportunities to enhance shareholder value. That is why the company would like to acquire a small, privately held biotechnology in the Boston area with a later-stage product or platform technology, Hedison said.

"An acquisition will improve value for shareholders and increase our product development pipeline," she said.

Earlier in the week, EPIX announced the lay-off of 50% of its employees, cutting the staff to 48 from 93 workers in response to the Food and Drug Administration's request for more studies before it grants approval to the company's blood-pool contrast agent Vasovist.

EPIX said the lay-offs affect both research and development and general and administrative workers and will be made in January.

The staff cuts will result in a one-time charge of $1.2 million, but are expected to reduce the company's cash burn for 2006 by 30% or $7 million. Anticipated cash burn for 2005 is $25 million.

On Nov. 23, EPIX announced it received a second approvable letter for Vasovist from the FDA that asked for more studies, work that the company said would require a substantial period of time to complete.

At the time, EPIX warned it would have to "substantially" scale back its research and employment.

No safety or manufacturing issues were raised in the FDA letter but it indicated that at least one additional clinical trial and a re-read of images obtained in completed phase 3 trials will be necessary before the agency can approve Vasovist.

EPIX's new employee, Chase was previously chief corporate counsel, associate general counsel and secretary at Transkaryotic Therapies, Inc., now part of the Shire Pharmaceuticals Group.

"We are extremely pleased that Phil has agreed to assist us as we move forward with our intention to enter into a transformative transaction with another biotechnology company," Michael Astrue, EPIX interim chief executive officer, said in the release.

EPIX is based in Cambridge, Mass., and develops pharmaceuticals for use in the diagnosis, treatment and monitoring of disease.

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