Mental arithmeticTHERE'S truth to the old adage about two being...

Mental arithmetic

THERE'S truth to the old adage about two being company and three a crowd, especially when it comes to takeovers.

The attempted hook-up by Avexa and Progen, which is being complicated by Cytopia's own designs on Progen, has sparked a little press-release war.

Cytopia's missive on Monday, claiming that Avexa faced a $95 million funding shortfall to complete phase III trials of its anti-HIV drug, was the cause of much consternation within the Avexa camp. Odd really, given that Cytopia was merely working off the figures inside Avexa's own merger documents.

"The Cytopia announcement refers to a '$95 million shortfall'. This statement is not consistent with any of the documents or commentary released by Avexa and Progen," an aggrieved Avexa responded in an announcement to the market, stressing that its $60 million bank balance following the merger should cover the estimated $45 million required to take the drug to the stage where critical 24-week data could be extracted from the phase III trial.

Apparently, the company is banking on some positive results by that point, which could provide it with an opportunity to launch its drug on to the market early. It is also hoping to have signed a pharmaceutical partner by then to help fund any remaining trials.

However, a merger document released by Avexa last week does point out that "the additional cost to complete the phase III program ... beyond the week 24 primary endpoints, extension studies post regulatory approval, a second study and launch preparations, is estimated at up to $110 million".

City Beat's calculator must be broken because we added $110 million to $45 million and came up with $155 million. We then subtracted those development costs from the $60 million in Avexa's bank and came up with ... a $95 million shortfall. Must get that calculator fixed.

http://www.theaustralian.news.com.au/business/story/0,28124,25041966-30538,00.html