,Matakus - whatever happened legally with entities, Inverseon...

,Matakus - whatever happened legally with entities, Inverseon people took over CBIO's board, and CBIO's shareholders suffered a dilution... CBio was in trouble and Inverseon came to the rescue. My point was that people like Glass would not have done that if XToll was the complete disaster the papers were saying it was.

From Courier Mail 3 July 2012

"LOCAL drug developer CBio aims to bail out of current troubles by merging with a US biotechnology company examining a treatment for people trying to quit smoking.

The deal, which independent experts said would combine entities worth up to $27 million, would dilute CBio shareholders and cede a 21 per cent blocking stake to management at San Francisco-based Inverseon.

But it would give the Brisbane company "a future" with a range of products, CBio chairman Ralph Craven told The Courier-Mail yesterday.

The alternative without a merger would be "more difficult in terms of raising capital", he said.

The independent experts report by BDO, which stated the deal was "fair and reasonable", was even bleaker. It spelled out problems after an arthritis trial with CBio's XToll compound last year failed to show a significant difference between patients and those taking a placebo.

"It is unlikely that the market would be willing to fund further investigations into the development of XToll," the report said.

CBio was established in 2000.

Since listing in June 2010, shares slumped, poor trial results emerged, a partnership deal collapsed and management resigned en masse. The company sued former executives for more than $1.2 million in a case relating to their golden parachutes.

A previous version of this story implied that the former management sued the company over severance payments. The lawsuit was in fact launched by the company.

The merged business would focus on Inverseon's lead product INV102. This compound is in middle-stage trials, with targets including asthma and "smoking cessation".

Smokers wanting to quit can suffer a hacking cough. Inverseon's website describes one potential target is to heal airways, boosting the success rate in quitting.

Work would also continue on XToll, focusing on a condition called Lupus, an inflammatory disease which causes the body's immune system to become hyperactive and attack healthy tissue.

Approval from CBio shareholders would mean issuing shares to Inverseon equal to 37.5 per cent of the merged company.

That means Inverseon's chief executive officer William Garner and its president Mitchell Glass, who are regarded as associates, will obtain 21.2 per cent of the new business."