Systems Medicine, an affiliate of TGen with offices in Scottsdale and Tucson, has been purchased for $20 million in stock by Seattle cancer-therapy firm Cell Therapeutics. The deal will provide Systems Medicine greater capital for developing anticancer drug Brostallicin while remaining in Arizona.

The move marks the first major deal between a TGen affiliate and a publicly traded biotech firm, and will enable Systems Medicine to grow from six employees to 15-20, according to the Arizona Republic.

"This is a great deal in that it helps drive the economic development engine in Arizona," said MaryAnn Guerra, president of TGen Accelerators and Chief Business Officer, in the Republic. "Here is an example of a group that was able to get established, get funding, and will retain operations here in Arizona."

An additional $15 million would be awarded to Systems Medicine shareholders if Brostallicin is approved by the Food and Drug Administration, which Cell Therapeutics executives say could happen by 2010.

Brostallicin is a genetically engineered drug being tested for effectiveness in cancer patients. Currently in phase-two clinical trials, the drug has shown promise for fighting cancer tumors in a safe manner.

"Brostallicin has a potentially unique ability to become more active in tumors that are resistant to other cancer drugs," said Dr. Jack W. Singer, chief medical officer at Cell Therapeutics.

Cell Therapeutics was attracted to Systems Medicine in part due to its connections with TGen and the Tucson-based Critical Path Institute, according to the Arizona Daily Star.

The move fills a gap in Cell Therapeutics' research pipeline while giving it access to TGen's genomic platform and high-throughout capabilities. Two of Systems Medicine's three founders have worked in senior positions with TGen—Daniel Von Hoff and Richard Love.

Systems Medicine's Scottsdale base is located at the Mayo Clinic campus, also home to TGen's drug-development arm. The firm's Tucson office is next to C-Path; its CEO, Jeffrey Jacob, helped to form C-Path.

Love had told the Arizona Republic in April that Systems Medicine could make Arizona a pioneer in a new approach to developing drugs. "The (pharmaceutical) industry is making a huge shift," Love said. "It doesn't turn on a dime. A small company can turn on a dime. That is why we are taking this approach."

Systems Medicine is one of five or more companies that are affiliated with or have been spun off by TGen.

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For more information:

"Biotech firm to buy drug company," Arizona Republic, 07/26/2007

"Tucson biotech firm is being bought out," Arizona Daily Star, 07/26/2007

"Cell Therapeutics buys Arizona firm for $20 million," Seattle Times, 07/25/2007

"Tailor-made pharmaceuticals," Arizona Republic, 04/17/2007