Chiron Corp., its eyes firmly focused on the cancer therapeutic tezacitabine, is acquiring Matrix Pharmaceutical Inc. for $61 million in cash.
Chiron, of Emeryville, Calif., is purchasing all of Matrix’s outstanding shares at $2.21 per share. The per-share price for Matrix’s stock, which has been down since a September setback, is 50 percent above last month’s average price, and more than 100 percent greater than the price over the past three months.
Matrix’s stock (NASDAQ:MATX) closed Friday at $2.59. It dropped 41 cents Monday, or about 16 percent, to close at $2.18. Chiron’s stock (NASDAQ:CHIR) dipped $2.06 to close at $42.66.
“Our board reviewed the transaction very carefully and we solicited the advice of our adviser, Banc of America Securities LLC,” said Jeff Cooper, vice president, finance, at Matrix. “We think it is a good opportunity for both the shareholder and the development of tezacitabine.”
John Gallagher, media relations manager, corporate communications and investor relations at Chiron, said the merger was about cancer, and specifically, about tezacitabine.
“We are particularly interested in tezacitabine,” he told BioWorld Today. “That is the thing [that brought the companies together]. If you compare the purchase price to comparable transactions, you’ll see it’s an attractive acquisition price for a Phase II program. We believe the purchase price is commensurate with tezacitabine’s potential for first- and second-line therapy for solid tumor cancers.”
Tezacitabine, a nucleoside analogue, is designed to affect DNA synthesis. Matrix, of Fremont, Calif., completed several Phase I studies of the product in patients with solid tumors, including esophageal, biliary, lung and colorectal cancers, and moved the product into Phase II trials. Gallagher said Chiron would take the tezacitabine helm once the acquisition is complete, which is expected this quarter.
Matrix’s stock has traded between 42 cents and $17.38 over the past year. Matrix’s IntraDose Injectable Gel, developed to treat patients with head and neck cancer, is partially responsible for the selling price of Matrix, having received a unanimous vote in September from the FDA’s Oncologic Drugs Advisory Committee against it being safe and effective. Matrix’s stock was held for two days at $6.79 while the committee reviewed the drug. However, the terrorist attacks of Sept. 11 immediately followed the vote and kept markets closed for four days. When trading resumed on Sept. 17, Matrix saw its stock end the day at $1.10. The fall deepened as Matrix laid off employees and planned the selling of its San Diego-based manufacturing facility, until the stock began a late-year rise that continued to its Friday close of $2.59. (See BioWorld Today, Sept. 11, 2001, and Oct. 11, 2001.)
And although Matrix filed for IntraDose’s approval in Europe in November, it appears Chiron will shelve the product.
“We have no plans for IntraDose at this time,” Gallagher said. “Our focus in on tezacitabine.”
The union of the companies will include some fat trimming.
“We are going to be offering a small number of employees permanent positions at Chiron,” Gallagher said. “Other employees will be asked to remain through a transition period, and nonessential employees will be let go. Matrix’s facility in Freemont will be closed.” Chiron would not comment on individual personnel, including Matrix’s CEO, Michael Casey.
Chiron has its hands in biopharmaceuticals, vaccines and blood testing. Its oncology portfolio includes the product Proleukin, approved for metastatic kidney cancer and metastatic melanoma, which pulled in $16 million in the third quarter of 2001. It has a Phase II cancer program under way in collaboration with Ribozyme Pharmaceuticals Inc., of Boulder, Colo., for Angiozyme. Also, it has a Phase I program for Proleukin in combination with rituximab in the treatment of patients with non-Hodgkin’s lymphoma. With the insertion of tezacitabine, the pipeline fattens.
“It’s an exciting addition to the company,” Gallagher said. “It helps to build on Chiron’s oncology portfolio. It keeps us on our focus of cancer and infectious disease.”