By Lisa Seachrist
Diatide Inc. entered into a merger agreement worth nearly $130 million cash with Schering Berlin Inc., a wholly owned subsidiary of Germany-based Schering AG.
Under the terms of the agreement, Schering will initiate a tender offer to acquire Diatide for a cash payment of $9.50 per share of common stock. Diatide currently has approximately 13.5 million shares, making the deal worth $128.3 million.
The stock price for the tender offer is a 20 percent premium to Friday's close of $7.875. Diatide's stock (NASDAQ: DITI) saw a 52-week high of $9 about a year ago, but was trading as low as $2.75 in the spring.
The company's stock closed Monday at $9.156, up $1.281 a share, or 16 percent.
"I think there was real mutual attraction between the two companies," said Richard Dean, Diatide president and CEO. "As a result of this deal we will be able to continue on course developing our technology. In effect, we will become the experts at Schering in the field of targeted imaging and radiopharmaceuticals."
Dean said Schering will continue to operate the Diatide facilities in Londonderry, N.H., while the company becomes a division of Schering's Berlex Laboratories Inc., in Montville, N.J. The Diatide board of directors has determined the tender offer and subsequent merger are in the best interest of the company's stockholders, Dean said.
"Diatide has a significant amount of expertise in nuclear medicine and we feel that is complementary with our programs," said Wendy Neininger, director of corporate communications at Berlex. "They already have two products on the market and they have an interesting pipeline."
The companies are in the process of filing the appropriate paperwork with the SEC to initiate the offer. Dean expects the deal to be finalized in late October or early November.
Diatide was founded in 1990 to develop and market molecular-targeting technology. The company has used its proprietary peptide and radiolabeling technologies to develop technetium-99m-labeled synthetic peptides, called techtides, as medical imaging agents.
In September 1998, FDA approved Diatide's AcuTect as a medical imaging agent to aid in the detection and localization of acute venous thrombosis in the lower extremities. The peptide associated with AcuTect adheres to the GP IIb/IIIa receptor on the surface of activated platelets, a major component of active thrombus formation.
Last month, the FDA approved Diatide's NeoTect as an imaging agent for lung cancer. The peptide in NeoTect recognizes the somatostatin receptor and adheres to tumor masses expressing the receptor in the lungs. In addition to these two approved products, Diatide is conducting Phase II studies of P748, a techtide for imaging pulmonary embolism, as well as a Phase II study of P483H for medical imaging of inflammation due to infection.
Diatide's pipeline includes therapeutic applications for its peptide technology. The company expects to move into the clinic shortly with a companion product to NeoTect using the same peptide component to adhere to lung tumors while linking that peptide to a beta-emitting radioisotope in order to kill the tumor cells.