Starpharma to Acquire Dendritic Nanotechnologies, Inc.

Oct 04, 2006, 01:00 ET from Starpharma Holdings Limited

    MELBOURNE, Australia, Oct. 4 /PRNewswire-FirstCall/ -- Starpharma
 Holdings Limited (ASX: SPL, OTC: SPHRY) today announced the signing of an
 agreement to acquire US-based Dendritic Nanotechnologies, Inc. (DNT) for
 US$6.97m (A$9.36m) payable through the issue of Starpharma shares. This
 attractively priced transaction offers significant benefits to Starpharma
      * the provision of diversified product pipeline with near-term cash-flow
        opportunities, and a more balanced risk profile;
      * an increased US presence;
      * The Dow Chemical Company will become a substantial shareholder in
        Starpharma (approximately 8.6%);
      * significant development, commercialisation and other business
        synergies; and
      * an extensive IP portfolio with existing royalty streams.
     Starpharma currently owns 33% of DNT and The Dow Chemical Company is
 the other major shareholder with a 30% equity stake. DNT will become a
 wholly owned operating subsidiary of Starpharma Holdings Limited and remain
 a U.S. corporation based in Mount Pleasant, Michigan. The transaction is
 subject to DNT shareholder approval, which is anticipated to be obtained in
 the next two weeks.
     "The acquisition of DNT is an extremely positive development for
 Starpharma" said Starpharma CEO, Dr. Jackie Fairley. "DNT has exciting new
 intellectual property in its Priostar(TM) dendrimers, with existing royalty
 streams in place from leading life-science companies. We believe that the
 combined entity is ideally placed to capitalise on the significant
 commercial opportunities for the technology. This will give Starpharma the
 opportunity to commercialise dendrimer technology not only in the
 pharmaceutical sector but also into other nearer-term life-science and
 industrial applications."
     Starpharma anticipates the following key benefits from the transaction:
     1. The provision of diversified product pipeline with near-term
 cash-flow opportunities, and a more balanced risk profile
     Starpharma's expanded product pipeline post-transaction will include
 both drug delivery and industrial specialty chemical applications, offering
 revenue diversification opportunities over and above its existing product
 portfolio. Starpharma gains ownership of a new family of scalable,
 precision dendrimer nanostructures pioneered by DNT, called Priostar(TM).
 The Priostar(TM) dendrimers address industry needs for nanostructures to be
 manufactured in industrial volumes with a low cost-base. Priostar(TM)
 dendrimers, together with Starpharma's existing polylysine dendrimers,
 allow Starpharma to commercially exploit opportunities in a broad range of
 industries, from high margin pharmaceutical goods, to larger volume
 industrial applications.
     The combined entity will focus on closing a number of potentially
 valuable commercial opportunities currently under discussion. Starpharma
 will also benefit from DNT's royalty streams from existing contracts with
 leading life- science companies. DNT's revenues from royalties and product
 sales were approximately A$1.25m in 2005.
     2. Increased US presence
     Prior to the transaction almost 10% of Starpharma's issued capital was
 held by US investors through the company's highly successful American
 Depositary Receipts (ADR) program. The DNT acquisition will increase the
 presence and profile of Starpharma in the United States, improving access
 to partners and capital markets. Starpharma also plans to appoint two new
 directors with North American corporate and capital markets experience to
 its Board. DNT's CEO, Dr. Robert Berry will remain with the company in
 charge of the U.S. subsidiary. Dr. Donald Tomalia, DNT's Chief Scientific
 Officer and the inventor of dendrimers will remain with the company to
 continue the development of the technology.
     3. Attractively priced transaction
     Starpharma is acquiring DNT at an attractive valuation by issuing
 existing DNT shareholders with equity in Starpharma, subject to various
 escrow provisions. This arrangement provides Starpharma shareholders with
 exposure to a broader range of revenue-generating opportunities at minimal
 dilution and allows DNT shareholders to continue sharing in the upside of
 the DNT portfolio through Starpharma's capital growth. Benefits to DNT
 include direct access to Starpharma's nano-pharmaceutical development and
 regulatory expertise, economies of scale and access to public market
     4. The Dow Chemical Company becomes a substantial shareholder in
     The acquisition will result in The Dow Chemical Company becoming a
 substantial shareholder in Starpharma. As part of the deal, Dow has agreed
 to enter into a tiered escrow arrangement over a 3-year period and has been
 granted the right to participate in any future capital raisings on a
 pro-rata basis during the escrow period.
     5. Significant development, commercialisation and other business
     Development synergies for DNT and Starpharma will result from combining
 commercialisation efforts of the companies' respective product platforms,
 technology development expertise, IP portfolios and commercial leads and
 business opportunities. Starpharma was the first company in the world to
 have an Investigational New Drug (IND) application allowed by the U.S. Food
 and Drug Administration for a dendrimer-based pharmaceutical product, and
 works closely with the FDA's Nanotechnology Working Group. DNT also has
 developed a productive working relationship with the FDA. This expertise
 will be very beneficial in the commercial exploitation of the company's
 dendrimer portfolio for both pharmaceutical and other life-science
     6. Extensive IP portfolio with existing royalty streams
     DNT currently owns the world's largest patent portfolio in the field of
 dendrimers as a result of the assignment to DNT of the Dow dendrimer patent
 portfolio and associated licenses in 2005. Following this acquisition
 Starpharma will benefit from DNT's royalty bearing agreements and will own
 a comprehensive IP portfolio that covers a broad spectrum of potential
 commercial applications for dendrimers. These will provide the company with
 a significant competitive advantage in the rapidly developing
 nanotechnology sector.
     Transaction Details
     Starpharma is to acquire the remaining 67% of DNT to increase its
 equity interest to 100%, through the offer of ordinary shares in Starpharma
 for a value of $6.97 million. Post-transaction Dow will hold approximately
 8.6% of Starpharma. The issue to DNT shareholders has been determined based
 on a VWAP (Volume Weighted Average Price) of Starpharma shares traded
 during the 5 trading days up to and including Monday October 2, 2006. The
 total number of Starpharma shares to be issued is 20,096,899. This
 represents approximately 13.6% of the issued capital of the company. These
 shares will rank equally in all respects with existing shares on issue.
 Shares issued as part of this transaction will be subject to varying escrow
 arrangements of up to 3 years. Starpharma has also agreed a royalty
 arrangement with Dow for a proportion of existing DNT royalty streams for
 up to five years, providing Dow maintains its shareholding in Starpharma.
     Completion Process and Timetable
     Starpharma anticipates that the transaction will be completed within
 the next two weeks subject to the receipt of approval from the DNT
 shareholders. Starpharma and Dow hold between them a majority of each class
 of DNT shares.
     About DNT
     Dendritic Nanotechnologies, Inc. (DNT) is committed to the development
 and commercialisation of new proprietary Priostar(TM) dendrimer technology
 to create innovative products with its business partners. DNT was
 incorporated in 2003, is a U.S. company with 16 employees, and is located
 in Mount Pleasant, Michigan. DNT's Chief Scientific Officer is Donald A.
 Tomalia, Ph.D., the inventor of dendrimers. DNT has a broad and
 comprehensive IP portfolio that comprises approximately 180
 patents/applications issued and pending, comprising 32 case families-a
 unique level of IP concentration among nanotechnology companies-and has
 existing licensing agreements with established revenue streams for
 dendrimer technology.
     DNT sells and licenses more than 200 of its dendrimer products to
 scientific innovators in academia, government and private institutions. DNT
 also has an active development portfolio including:
      * Targeted Ovarian Cancer Diagnostic and Delivery technology based on
        Priostar(TM) dendrimers
      * Transfection reagents for siRNA
      * Specialty chemical applications
     DNT has developed a new family of dendrimers called Priostar(TM). This
 proprietary technology allows the company to develop a broad range of
 commercial applications that were previously not economically viable. The
 Priostar(TM) family of dendrimers serves as a major nanostructure platform
 with broad commercial applicability. These dendrimers are expected to find
 value in the industrial sector as they will help develop new products and
 improve existing technologies for applications such as surface coatings,
 sensors, surfactants, binders, antimicrobials, lotions, cosmetics,
 pigments, dyes, ion exchange media, and ultrafiltration. Last year, Frost &
 Sullivan awarded DNT the "Advanced Medical Applications Technology of the
 Year" Award for its work in developing and commercialising the Priostar(TM)
 family of dendrimers.
     About Starpharma
     Starpharma Holdings Limited (ASX: SPL, OTC: SPHRY) leads the world in
 the application of dendrimer-based nanotechnology to pharmaceuticals. The
 Company's lead development product is VivaGel(TM) (SPL7013 Gel), a vaginal
 microbicide designed to prevent the transmission of STIs, including HIV and
 genital herpes.
     VivaGel(TM) is the first example of a product to come from Starpharma's
 dendrimer-based discovery pipeline, which also includes specific programs
 in the fields of ADME Engineering(TM) (using dendrimers to control where
 and when drugs go when introduced to the body), Polyvalency (using the fact
 that dendrimers can activate multiple receptors simultaneously) and
 Targeted Diagnostics (using dendrimers as a scaffold to which both
 location-signaling and targeting groups are added to allow location of
 specific cell type, such as cancer cells).
     American Depositary Receipts (ADRs): Starpharma's ADRs trade under the
 code SPHRY (CUSIP number 855563102). Each Starpharma ADR is equivalent to
     ordinary shares of Starpharma as traded on the Australian Stock
 Exchange. The Bank of New York is the depositary bank.
     A type of precisely-defined, branched, nanoparticle. Dendrimers have
 applications in the medical, electronics, chemicals and materials
     CONTACT: Rebecca Wilson
              Buchan Consulting
              T: +61 2 9237 2800
              M: +61 417 382 391
              Dr Jackie Fairley
              Chief Executive Officer
              T: +61 3 8532 2704
              Ben Rogers
              Company Secretary
              T: +61 3 8532 2702
              Dendritic Nanotechnologies, Inc
              Dr Robert Berry
              Chief Executive Officer
              T: +1 989.774.1799

SOURCE Starpharma Holdings Limited