By Mary Welch

Staff Writer

North American Vaccine Inc. is negotiating with an unnamed company wanting to acquire it through a stock transaction or merger.

In addition, this unidentified party guaranteed a $5 million line of credit from the Bank of America N.A. Subject to certain conditions, an additional amount of up to $25 million could be made available as well.

"We are negotiating exclusively with this company but it is a non-binding proposal," said Thomas Newberry, director of investor relations for North American Vaccine. "We are negotiating exclusively until a decision is made one way or the other."

The proposal contemplates a per-share purchase price that is in line with its recent trading price, which has been around $5.50 to $7.50 the past month. North American Vaccine's stock (AMEX:NVX): closed Monday at $5.375, up 6cents.

Although the suitor wasn't named, some could be eliminated.

It definitely isn't BioChem Pharma Inc., of Laval, Quebec, Newberry said. "We are talking with a company that has no affiliation with us whatsoever. "That eliminates BioChem Pharma."

BioChem Pharma owns about 40 percent of the Beltsville, Md., company. Among the companies that have an "affiliation" with North American Vaccine are Abbott Laboratories, of Abbott Park, Ill., and Pasteur-Merieux Connaught, of Lyon, France.

One name that has swirled around as the potential beau is Baxter International Inc., of Deerfield, Ill. Newberry would not comment on the speculation.

"It is difficult trying to draw any conclusions about who the party could be," said Vandana Bapna, a biotechnology analyst with Offutt Securities Inc., of Hunt Valley, Md. "North American Vaccine has attractive assets with good technology and proof of product. The company's meningococcal vaccine has been proven to be superior compared to its competitors' products. It is also anticipating approval and a successful launch of a Group C meningococcal vaccine in the UK, and Amvax in Europe in 2000.

"The negative of the company is its debt," she continued. "It is mounting up."

The company has been relying on lines of credit to help fund its operations. "At the end of the first quarter, they had $13.5 million in cash, which was sufficient to cover the second-quarter 1999 operations," Bapna said.

In July, BioChem Pharma guaranteed a $6 million line of credit from the Royal Bank of Canada.

"We don't anticipate them being profitable until mid-2000," Bapna said. "We are a little cautious about its debt but we put our evaluation at about $11 per share."

The company's results for the quarter ended June 30 showed a net loss of $13 million for the quarter vs. $11 million for the same quarter last year. Revenues were $1.7 million, compared to $1.2 million for the same period last year. The company had 32.4 million shares outstanding.