OrthoLogic to acquire some assets of AzERz in cash, stock deal worth $8.1 million

By E. Janene Geiss

Philadelphia, Feb. 24 - OrthoLogic Corp. said Friday it has agreed to acquire certain assets and assume certain liabilities of AzERx Inc. for $390,000 cash and the issuance of 1,355,000 shares of OrthoLogic common stock valued at about $7.7 million based on the Feb. 23 closing share price of $5.67.

The acquisition provides the company with a new technology platform that diversifies the portfolio and may provide more than one potential product, according to a company news release.

AzERx's lead compound is AZX100, a 24-amino acid peptide. AZX100 is being investigated for medically and commercially significant applications, such as the treatment of vasospasm associated with subarachnoid hemorrhage, the prevention of keloid scarring and the treatment of asthma.

Preclinical and human in vitro studies have shown that this novel compound has the ability to relax smooth muscle in multiple tissue types, officials said.

"We are encouraged by the early work completed by the AzERx team and are looking forward to advancing AZX100 toward the clinic. This compound and its related technology have the potential to treat several diseases with significant unmet medical need," James Pusey, president and chief executive officer of OrthoLogic, said in the release.

Under terms of the transaction, OrthoLogic said it will acquire an exclusive license for the core intellectual property relating to AZX100 and will continue to develop the new class of compounds in the field of smooth muscle relaxation, called Intracellular Actin Relaxing Molecules, or Icarms, based on the unique technology invented by AzERx.

Other assets acquired and liabilities assumed in the transaction are not material, officials said. The transaction is expected to close during the first quarter of 2006.

Founded at Arizona State University in Tempe, AzERx is developing peptide drugs for disorders involving smooth muscle.

OrthoLogic is a Tempe, Ariz.-based biotechnology company focused on the development and commercialization of the novel synthetic peptide Chrysalin (TP508) in two lead indications - fracture repair and diabetic foot ulcer healing.

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