By Brady Huggett

Aurora Biosciences Corp. entered a definitive merger agreement to buy PanVera Corp. for stock worth $86 million in a deal that brings together complementary technologies.

"We think this provides an excellent opportunity to expand our protein capabilities," said Doug Farrell, senior director, investor relations and corporate communications at Aurora. "Now that we have entered the post-genomic era, proteomics is the next focus and this acquisition puts us in a good position to capitalize on that."

The deal, expected to close in the first quarter of 2001, will be accounted for through the pooling-of-interests method. PanVera stockholders will receive approximately 1.34 shares of Aurora stock for each share of PanVera stock, and Aurora will issue a total of 1.9 million shares.

Based on Aurora's (NASDAQ:ABSC) closing price of $45.312 Thursday, the deal was valued at $86 million. Aurora closed unchanged Friday.

Aurora, of San Diego, designs, develops and commercializes drug discovery technologies, services and systems. Its core technologies include proprietary fluorescence assay technologies, including GeneBLAzer and VIPR technologies, its functional genomics GenomeScreen program, its automated master compound store and its ultra-high-throughput screening system, UHTSS Platform, and subsystems.

PanVera, of Madison, Wis., develops products and technologies that allow pharmaceutical companies to select and develop new drugs. It has produced recombinant proteins for commercial sale, including nuclear receptors, protein kinases and drug-metabolizing enzymes. It also provides CoreHTS fluorescence polarization-based assays for high-throughput screening, and contract services in protein manufacturing, assay development and drug metabolite production.

The high-throughput screening of both companies is similar and part of what makes the acquisition a good idea, Farrell said.

"What PanVera gives us is the capability to express and purify high-quality proteins on a substantial scale," Farrell said. "Their technology is highly complementary to Aurora technology."

This marks the second acquisition in the past two months for Aurora. In October, it expanded in the field of biofilms and quorum sensing by acquiring Quorum Sciences Inc., of Frederick, Md., for stock worth about $4 million. The move to grab PanVera further stretches Aurora's drug discovery platform. (See BioWorld Today, Oct. 23, 2000.)

"It isn't a huge deal, but it expands Aurora's Big Biology initiative," said Edward Tenthoff, research analyst at Robertson Stephens Inc. "It helps them to find proprietary targets and brings them a pharmaceutical expertise."

Tenthoff said he likes the recent moves Aurora has made.

"I'm pretty bullish on Aurora and what it has been doing, picking up small technologies," he said. "It does enhance its top line. It is bolstering its own drug discovery platform and [PanVera] will grow revenues for Aurora nicely."

Farrell said there isn't a hard plan to grow Aurora through takeovers.

"We think mergers and acquisitions are important opportunities, but we are growing well internally," Farrell said. "We will make acquisitions if they are a strategic fit and it doesn't dilute our strategic directions."

Aurora withdrew a public offering due to market conditions in the spring that would have garnered an estimated $207.3 million. Farrell said there is no plan to proceed in that direction again, but added that things could always change. (See BioWorld Today, March 27, 2000.)

PanVera has seen its revenue increase steadily over the past four fiscal years ending Sept. 30 - from $3.4 million in 1996 to $11.4 million this year. That trend has Farrell convinced.

"We haven't forecasted, but absolutely we think they will bring in revenue," Farrell said. "[PanVera] is a very well-run company. We are profitable, they are profitable. We will have financial synergies."