By Randall Osborne

West Coast Editor

Immunex Corp. aims to change its relationship with American Home Products Corp. (AHP), reducing the latter's ownership by more than 10 percent while buying from AHP a manufacturing facility for Enbrel in Rhode Island, and gaining a credit line of up to $550 million through third parties for a new research and technology center.

Tim Warner, spokesperson for Seattle-based Immunex, said the company is "positioning for long-term growth."

Short term, Wall Street did not respond happily to the news. Immunex's stock (NASDAQ:IMNX) closed Thursday at $47, down $6.437, or 12 percent.

"We don't comment on any fluctuations, up or down, in the stock," Warner said.

Under the terms of the arrangement, Immunex registered to offer up to 20 million new shares of common stock, and AHP would offer up to 50 million shares of Immunex, which would cut AHP's control from about 55 percent to about 43 percent. If ownership falls below 43 percent, AHP loses an Immunex board seat.

AHP also said it would convert its $450 million of convertible subordinated Immunex notes into 15.5 million shares of common stock.

New shares from the offering and conversion will mean about 7 percent dilution, which is likely to be offset by incremental interest from the transactions, said analyst Elise Wang, of PaineWebber Inc. in New York, although this will depend on the timing and issue price of the new shares.

"I wouldn't say [AHP] is pulling out at all," Wang said. "They're looking to monetize their investment. Both sides get something out of this. Quite frankly, it's a pretty good deal for both parties. It does create somewhat an overhang in Immunex's stock, which is probably why we saw it dip down [Thursday]."

AHP will sell to Immunex a recently acquired manufacturing facility in Rhode Island, which is being retooled to boost manufacturing capacity for Enbrel, approved in 1998 for rheumatoid arthritis and recently granted an expanded indication that will more than triple the size of the market. (See BioWorld Today, June 8, 2000, p. 1.)

"They're building it out, and could double the capacity," Wang said, adding the acquisition is said to be "on very favorable terms."

AHP will provide the $550 million through third-party lenders, to help build Immunex's new center in Seattle.

"We call it the Helix Project, right on Puget Sound," Warner said. "We're in about nine buildings right now."

Licensing agreements with AHP related to Enbrel are unchanged.

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