Dutch firm
completes
ProBio deal

Struggling spinoff
owns rights to the
"Honolulu Technique"

By Tim Ruel
Star-Bulletin

A Dutch biotechnology firm has completed its purchase of ProBio Inc., giving a new lease on life to the company that owns the rights to the highly publicized technique of mouse cloning developed at the University of Hawaii.

Pharming Group N.V. said it completed the transaction April 3. Under the purchase terms, former ProBio shareholders may receive up to $4 million in shares of Pharming during the next two years, with the condition that ProBio meets specific sales targets.

ProBio's former chairman, Laith Reynolds, a native of Western Australia, will continue to run ProBio as chief executive.

The share price for the transaction is locked in at 12.52 euros, or a little more than $11, based on yesterday's exchange rate.

ProBio was set up on Oahu in 1997 as a subsidiary of Australian agricultural technology firm ForBio Ltd. to market the so-called "Honolulu Technique" of cloning mice, developed by scientists at UH. But one of the scientists, Anthony Perry, sued the university in 1999, claiming he is entitled to the license because he introduced ProBio to the university. UH countersued, alleging Perry shared confidential information on laboratory work. A trial is scheduled for this fall.

ProBio has signed a settlement with the university, the terms of which are confidential. Originally, ProBio was to pay the university $2 million plus patent costs for the license. ProBio has since spun off from ForBio, but has had trouble finding venture capital on its own.

Pharming announced its plans to buy ProBio in November. Originally, the Dutch company had said it needed to raise another $4 million to finance ProBio's operations. However, Pharming now says it is going forward with the purchase without the extra funds.

The international downturn for technology issues on the stock market probably led Pharming to finance ProBio's operations with cash, rather than a new issue of stock, said ProBio corporate secretary Cameron Reynolds, who spoke yesterday from a cell phone in Australia. Pharming will likely seek funds when the markets have improved, said Cameron Reynolds, whose father is Laith Reynolds.

ProBio has since moved most of its operations back to Australia after failing to get financing from other local investors. The company was going to leave the islands as early as 1999, but briefly changed its mind after getting a $750,000 loan from the state government. ProBio paid off the loan in full at the end of last month, Cameron Reynolds said.

ProBio is now debt-free and plans to focus on its core business of relicensing its patented technologies to labs and major pharmaceutical companies. The company now conducts regular trade shows where it illustrates the mouse-cloning technology on large plasma display screens for other scientists to watch. "It's fantastic," Cameron Reynolds said.

Pharming said the purchase of ProBio will expand its business and its portfolio of products developed from genetically engineered animals. Pharming has operations in Belgium, Finland, the Netherlands and the United States, employing more than 200 people.

Pharming's share price has slipped 47 percent to a recent close of $7.79 from its initial public offering at $14.62 a share in July 1998. Its loss from operations widened 19 percent to $14.75 million in 2000 from $12.44 million in 1999, according to a recent press release.