Mumbai: Chennai-based pharmaceutical major Orchid Chemicals & Pharmaceuticals Ltd is raising its stake in Bexel Parmaceuticals of the US from the current 74 per cent to 100 per cent as part of the company's efforts to consolidate its new drug discovery research activities under a common umbrella.

Orchid said it would pay $3 million for acquiring the remaining 26 per cent stake, bringing Orchid's total investment in Bexel to $18 million.

Under the arrangement, both the companies hope to bring all drug discovery activities under a unified structure, providing seamless integration of the several drug discovery programmes being pursued at Orchid and Bexel.

The acquisition will also help Orchid maintain a discovery front in the US and a discovery-cum-developmental back-end at Chennai. Orchid has already established a wholly owned subsidiary, Orchid Research Laboratories Limited (ORLL), to channel its drug discovery work.

Under the deal, Orchid will buy out the shareholding of the US promoters of Bexel Pharmaceuticals for cash consideration of $3 million. The promoters and key employees of Bexel would be granted an option to buy 650,000 shares as per standard Orchid ESOP guidelines.

In an independent arrangement, Bexel would provide an earn-out to the principal founder of Bexel in the event of an out-licensing deal for BLX-1002 materialising in a prescribed timeframe based on the Phase II clinical trials that are planned. The managerial and scientific organisation of Bexel will continue as an integral part of the new structure, providing continuity and commitment to Orchid's broader drug discovery thrust.

Bexel has been focusing on drug discovery research in metabolic diseases (such as diabetes, obesity and auto-immune diseases) while Orchid has been focusing on inflammation, cancer and anti-infective areas. Bexel's anti-diabetes molecule BLX-1002 has completed Phase I safety and tolerability studies in healthy human volunteers as well as safety and tolerability studies in diabetic patients. Phase I human clinical trials conducted in four stages so far have been successful without any adverse side effects. Besides glucose lowering in diabetic patients, the compound also showed additional benefit of lowering of triglycerides and hypertension.

Bexel and Orchid are now planning to conduct more elaborate Phase II human clinical trials on BLX-1002 in the context of its efficacy in multiple indications. These will be conducted in two stages of a 28-day human clinical study followed by a 90-day study if necessary to generate significant additional data on the compound. These trials will be carried out under the investigational medicinal product dossier (IMPD) procedure in Europe. Parallel biological studies are being undertaken to identify the mechanisms of action in the context of efficacy in diabetes and related complications.

Besides BLX-1002 and its supportive anti-diabetic NCE pipeline, Orchid and Bexel have several leads with therapeutic potential in varied areas. These include a new anti-obesity lead and two anti-inflammation and anti-cancer leads from Orchid, which are targeted to move into human clinical studies upon the completion of the advanced pre-clinical studies currently underway.