By Mary Welch
A San Francisco investment firm and the Chicago-based Pritzker family have joined together to purchase $44 million in Medarex Inc. stock that is earmarked for former GenPharm International Inc. shareholders as part of Medarex's 1997 takeover of GenPharm.
Last October, Medarex, of Annandale, N.J., paid $62.7 million in stock for GenPharm, of Palo Alto, Calif. Shares totaling $18.3 million already have been paid. The remaining $44.4 million in Medarex stock is what the two investment groups seek to purchase from GenPharm shareholders. Under terms of the Medarex takeover, the shares, which total 6.6 million, were not scheduled to be paid until the end of 1998.
In addition to the Pritzker family, the other investor group is Bay City Capital LLC (BCC). The new investors want to purchase at least half of the 6.6 million shares in order to consummate the deal. Ideally, they would like to buy all the stock held by GenPharm shareholders, which represents about 22 percent of the company.
The former GenPharm shareholders have 20 business days as of June 11 to decide.
In a separate transaction, Medarex already has granted BCC warrants to purchase an additional 2 percent of the company, or 804,000 shares, at $10 a share.
"The former shareholders of GenPharm — it's a couple hundred former investors and employees — can sell or not," said Donald Drakeman, Medarex president and CEO. "We have no indication yet of what they will do. It's not new money into the company — just new investors and partners for Medarex."
BCC is a merchant banking and management advisory firm with a $100 million life sciences fund. Its principals are Fred Craves, former CEO of Berlex Biosciences Inc., of Richmond, Calif.; John Diekman, chairman of Affymetrix Inc., of Santa Clara, Calif.; and Roger Salquist, former chairman and CEO of Calgene Inc., of Davis, Calif. The Pritzker family invests in and manages businesses in the industries of travel and leisure, manufacturing, real estate, banking, insurance and life sciences. They own several Hyatt Regency hotels, Drakeman said.
Currently there are no GenPharm representatives on Medarex's eight-person board. Depending on how much stock the BCC-Pritzker group purchases, at least one new seat on the board will be created.
"We don't know who that person or persons will be," Drakeman said. "However, we are looking forward to Bay City Capital and the Pritzker family being active and helping us maximize the business. We expect them to be active in the company. They have great resources and knowledge."
Medarex reported 1997 year-end revenues of $3.2 million and a loss of $12.8 million, reflecting the purchase of new technology as well as the acquisitions of GenPharm and Houston Biotechnology Inc., of The Woodlands, Tex. for $8.6 million in December 1996.
The company has strategic alliances with Centeon LLC, of King of Prussia, Pa.; Centocor Inc., of Malvern, Pa.; Eisai Co. Ltd., of Tokyo; LeukoSite Inc., of Cambridge, Mass.; Merck KgaA, of Darmstadt, Germany; Norvartis AG, of Basel, Switzerland; Santen Pharmaceutical Co. Ltd., of Osaka, Japan; and Schering AG, of Berlin.
Medarex develops monoclonal antibody-based therapeutics for use in a number of indications, including cancer, heart disease and transplant rejection.
Medarex's stock (NASDAQ:MEDX) closed Thursday at $6.75, up $0.437. *