Watson Pharmaceuticals Inc. said Sunday it plans to purchase TheraTech Inc. in a stock deal initially valued at about $300 million, giving TheraTech shareholders a stake of about 6 percent in Watson.

The amount of Watson stock (NYSE:WPI) received will depend on the average closing price for 10 days before the deal closes, which is expected early in 1999. TheraTech will receive between 0.266 and 0.296 shares of Watson common stock for each TheraTech share held.

Watson, of Corona, Calif., primarily is in the business of selling off-patent and proprietary drugs. Its areas of focus are women's health, dermatology and neuorology/psychiatry. TheraTech, of Salt Lake City, focuses on controlled-release drug delivery products, including a variety of transdermal patches, and is developing new products with a number of pharmaceutical companies.

"We've been looking to bring on a marketing capability so we're not so reliant on our partners for marketing," Charles Ebert, TheraTech's senior vice president of research and development, told BioWorld Today. "Watson has close to 400 sales reps in the areas we're working in. They are looking for R&D capability to develop ethical products. It's a very good strategic fit."

Ebert said the deal will allow TheraTech to see a greater return on its products, since the marketing rights won't be sold away, and also gives shareholders a nice premium to the recent trading price.

TheraTech stock (NASDAQ:THRT) gained 32 percent on the news, closing up $3.125 Monday at $12.875. Watson fell $1.50 to $50.75. At that price, and down to $45.07, Thera-Tech shareholders would receive .266 Watson shares for each TheraTech share held.

— Jim Shrine