By Frances Bishopp
In a deal worth between $60 million and $63 million, Agouron Pharmaceuticals Inc. has purchased Alanex Corp. for 1 million shares of newly issued Agouron common stock, merging its drug discovery capabilities with Alanex's combinatorial chemistry technology.
Alanex, which is privately held, will become a wholly owned subsidiary of Agouron, and all of the 80 Alanex employees will become employees of that subsidiary. The transaction is expected to close in approximately 30 days.
Agouron's stock (NASDAQ:AGPH) closed Tuesday at $61.937, down $0.063.
Agouron's protein structure-based drug design, although successful, has not been without its limitations, such as some restrictions on the kinds of targets -- G protein receptors and certain other receptor class molecules -- that can be approached, said Peter Johnson, president and CEO of Agouron.
Also hampering Agouron's progress in the past, Johnson said, have been long waiting periods for the structure of various enzyme targets to be solved as well as a difficult technical step, once the structure is in hand, in getting the actual lead compound.
After months of exploring the entire list of combinatorial chemistry companies, Agouron determined that Alanex's technology and software would best enhance Agouron's own drug discovery efforts, particularly in the antiviral area, Johnson said.
Johnson said Alanex's history of off-setting its operating expenses with revenues of corporate partners also appealed to Agouron and Agouron plans to encourage Alanex's multi-client business.
Alanex president and CEO Marvin Brown said the merger allows Alanex to expand its technology base by access to Agouron's structure-based design technology. Alanex, he said, will independently carry out certain proprietary drug discovery programs and will continue all of its external collaborations.
In the near future, Alanex anticipates the consummation of several additional important drug discovery collaborations, Brown said.
Jay Silverman, an analyst with Robertson Stephens & Co., of San Francisco, sees the merger as a complementary fit between the two companies' programs. "Also the fact that the companies are already located next door to each other should make this acquisition a simple one to execute," Silverman said.
The two companies, Silverman said, also share Roche Bioscience, of Palo Alto, Calif., as a corporate partner, for which they can now share equal due diligence.
The merger, Silverman said, will bring Agouron into new areas of diabetes, obesity and neuroscience.
Analyst Kevin Tang, of Alex Brown & Sons Inc., of Baltimore, said Agouron's rational drug design combined with Alanex's combinatorial chemistry will most importantly accelerate the rate at which new products can be discovered.
Tang also noted that Agouron's stock last week dropped approximately $12 over the course of the week. "The biotech index is down about 26 percent since its peak in February," Tang said. "Agouron stock went up more than most stocks and now the stock has come down with a correction in the overall sector."
In March 1997, Agouron, of La Jolla, Calif., launched its first product, HIV protease inhibitor Viracept, for treatment of adults and children, in the U.S. Viracept is indicated for the treatment of HIV infection when antiretroviral therapy is warranted, an indication based on analyses of surrogate marker changes in patients who received Viracept in combination with nucleosides analogues or alone for up to 24 weeks.
Alanex, of San Diego, focuses on the discovery of drug leads through the high-speed screening of diverse chemical libraries designed by computational methods and generated by combinatorial chemistry. Alanex uses its own software to design either broad or highly targeted combinatorial libraries of molecules that can readily be synthesized in large numbers.
Alanex currently has collaborative arrangements with Aurora Biosciences Corp., of La Jolla, Astra Pharma Inc., of Sodertalje, Sweden, Novo Nordisk, of Bagsvaerd, Denmark and Roche Bioscience.
FDA Scolds Agouron For Press Release
In an unrelated event this week, Agouron received a "regulatory guidance letter" from the FDA regarding the company's promotion of Viracept. The letter, dated April 18, 1997, indicated that Agouron had improperly dispensed a Viracept press release that lacked balance and implied the results of a clinical study of the drug were more representative than they really were.
Also the FDA said the press release was never cleared by its Division of Drug Marketing, Advertising and Communications.
Donna Nichols, senior director of corporate communications at Agouron, told BioWorld Today, that even though Agouron and the FDA had an honest difference of opinion in terms of what information is appropriate for a press release vs. the package insert, Agouron has agreed to abide by FDA guidance which means the FDA will review all Agouron press releases before publication
The letter from the FDA was simply a little wrist-slap, Silverman said, and has nothing to do with the company's promotional material or sales force. Plus the launch of Viracept, he added, seems to be going extremely well.
Tang agreed, adding that it was not a FDA warning letter (which sometimes signals FDA intent to take legal action) and the only consequence appears to be Agouron will now have to have FDA approval on all press releases. "This letter will not have a material impact on Agouron," Tang said. *