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SmallCaps Online LLC (formerly SmallCaps Online LLC) Comments on Valentis’ Purchase of PolyMASC Pharmaceuticals
Visit SmallCaps Online’s Web Site at www.SmallCapsOnline.com for Detailed Report
New York, NY, May 27, 1999 — SmallCaps Online LLC (formerly SmallCaps Online LLC) commented today on Valentis, Inc.’s (Nasdaq: VLTS) purchase of PolyMASC Pharmaceuticals (London AIM: PCP) and reiterated its BUY recommendation on VLTS stock. The full text of this report can be accessed at SmallCaps Online’s web site, at www.SmallCapsOnline.com.
Excerpts from the report follow:
Valentis Inc. announced yesterday that it had entered into a definitive agreement to merge with PolyMASC Pharmaceuticals plc, a London-based biologics delivery company. We believe this is a very shrewd transaction on the part of VLTS and is consistent with the Company’s strategy to expand its capabilities in gene therapy (and thus DNA delivery) into a broad array of biologics delivery systems. We continue to believe that VLTS is undervalued at current levels and recommend purchase for those investors tolerant of the risks associated with small-cap equity investments.
The PolyMASC technology: Many problems arise when attempting to deliver peptides, proteins and other large molecules to the human body. Not only are the substances rapidly cleared from the body, but they are also frequently viewed as foreign and can illicit an immune response from the body or have other toxic effects. Due to poor bioavailability of these substances, large initial doses are often given intravenously, creating toxicity. Subcutaneous administration can overcome this problem, but there is often a large loss of dose at the injection site. PolyMASC has developed a PEGylation technology, by which polyethylene glycol (PEG) chains are coupled to molecules to essentially hide the substance from the body’s immune system and from the degradation process, allowing delivery of the therapeutic. Historically, the PEGylation process has had problems of its own, including poor conservation of biological activity and certain toxicity issues. PolyMASC has solved these problems by creating novel and proprietary methods for linking PEG to the molecules. Through this more mild PEGylation process, bioavailability, solubility and biological activity are all enhanced and, due to the unique coupling process, the toxicity problems resolve. This technology is also extremely versatile and can be applied to the delivery of proteins, peptides, peptidomimetics (peptide-like small molecules), antibodies, antibody fragments, liposomes, viral gene therapies and replicating viruses.
The Agreement: As a result of the merger, which was unanimously approved by the boards of both companies and still must be approved by PolyMASC shareholders, VLTS will issue approximately 4.4 million shares worth about $20 million. Each PolyMASC shareholder will receive 0.209 shares of VLTS for each share and is expected to close during the third quarter of 1999. PolyMASC will become a wholly owned subsidiary of VLTS. The new London facility will focus primarily on the development of delivery systems for peptides, proteins, antibodies and liposomes, while the Texas facility will focus on plasmid-based gene therapies and the California facility on manufacturing, clinical development, viral-based gene therapies and replicating viruses.
Strategic Implications: We believe this agreement significantly broadens VLTS’s technology portfolio and evolves the company from being a pure gene delivery company into a biologics delivery company. With the worldwide market for biologics expected to approach $30 billion by the year 2008, we feel VLTS is well poised to take advantage of this large and growing market. In addition, the Company already has an impressive list of corporate partners–we expect this transaction to further enhance VLTS’s ability to attract additional corporate partners interested in biologics delivery. We expect a steady flow of positive news events from VLTS over the next 12 months and anticipate continued stock appreciation.
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SmallCaps Online LLC is a registered investment advisor focused on identifying emerging growth companies in the healthcare and information technology sectors that offer compelling investment opportunities over the long term. By providing comprehensive financial services, including corporate finance, M&A advisory, strategic partnering and communications consulting, the company positions itself to provide a fully integrated package of value-added services to emerging growth companies.
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The information in this press release has been obtained from sources that SmallCaps Online LLC believes to be reliable, but the Company does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by SmallCaps Online LLC for the purchase or sale of any securities. SmallCaps Online LLC or any of its affiliates has performed investment banking, consulting or other services for VLTS and may solicit investment banking, consulting or other business from, any company mentioned in this release. SmallCaps Online LLC or any of its affiliates or persons associated with SmallCaps Online LLC may at anytime be long or short any of the securities referred to herein and may make purchases or sales thereof while the Company’s reports are in circulation or posted on the SmallCaps Online LLC web site at www.SmallCapsOnline.com. This material, or any portion thereof, may not be reproduced without prior permission from SmallCaps Online LLC. SmallCaps Online LLC is not responsible for the contents of this document that is intended for electronic transmission and could be thus subjected to tampering or alteration. Copyright © 1999 by SmallCaps Online LLC. All rights reserved.