By Matthew Willett

Celgene Corp. completed its acquisition of Signal Pharmaceuticals through a stock swap initially valued at $196 million, a deal Celgene said will expand its pipeline and bolster its current technology development efforts.

The gain of Celgene's share price since the deal's disclosure pushed the stock value to Signal up to $274 million.

Celgene Chief Financial Officer Robert Hugin said the Warren, N.J.-based company and its investors are excited about the possibilities the acquisition opens.

"We're very pleased that things went so very smoothly, and we're excited about the prospects of the combined company," he said. "The whole transaction has been one that's moved quickly and smoothly. We began talking about it in April and announced it in June and now, only two months later, it's closed."

The deal for Signal cost Celgene about 3.67 million newly issued shares, representing about a 4 percent dilution, Hugin said. Signal, of San Diego, will operate as a separate subsidiary.

"We'll keep their facilities and, if anything, we'll be expanding their operations. They have an exciting pipeline of 24 drug leads," he added.

Included in the acquisition are projects that could move into the clinic for testing as early as next year, Hugin said. Signal's selective estrogen modulator and kinase inhibitor are "moving very quickly," he said.

"We think it fits nicely with our research program and development capabilities. I think we'll move very aggressively, and that they'll help our pipeline of drugs and accelerate some of our existing programs," Hugin said.

Celgene's pipeline includes its proprietary immunomodulatory drugs, called ImiDs; Selective Cytokine Inhibitory drugs, called SelCIDs; immunotherapeutics; and an angiogenesis inhibitor.

Market reaction to the merger was quick, shooting Celgene stock up 10 percent $58.875 when the merger was announced June 30. (See BioWorld Today, July 3, 2000, p. 1.)

Celgene's stock (NASDAQ:CELG) rose 75 cents Friday, closing at $74.75, meaning the stock gained 40 percent since the day before the merger was announced.

Morgan Stanley Dean Whitter has a strong buy recommendation on the stock, calling the company one of its "favorite names in the biotech sector."

"We believe that this is just the beginning and that 2001 will witness major events such as Celgene's first oncology approval for Thalomid, the launch of Attenade and significant advances in second-generation SelCIDS and ImiDs," Morgan Stanley analyst Caroline Copithorne said in a research note.

She cited Celgene's Thalomid sales, a filing for Attenade (chirrally pure Ritalin), results of Thalomid trials in earlier-stage multiple myeloma patients and additional peer-reviewed data in medical journals, in addition to the Signal merger, to push the stock in the coming year.

Thalomid received FDA approval in July 1998 for the treatment of cutaneous manifestations of severe erythema nodusum leprosum, a debilitating condition associated with leprosy. It is being tested in about 140 company- and investigator-sponsored studies in cancer and immunological disorders.

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