Sandoz Ltd. made an unsolicited bid of $17 per share for the 27percent of SyStemix Inc. it doesn't already own, SyStemix officialssaid Friday.

The pharmaceutical company already holds about 73 percent of the14.5 million outstanding SyStemix shares, which it purchased in 1991and 1995 for a total of $472 million. The value of the cash offer forthe remaining 3.9 million shares is about $66.3 million.

SyStemix shares (NASDAQ:STMX) jumped past the offer priceFriday to close at $18.63, a 69 percent increase, after going as high as$20.50. The stock closed Thursday at its 52-week low of $11 pershare. The previous 52-week high was $16.75, but the stock closedslightly higher than $17 in February 1995 when Sandoz purchased itsadditional stake.

If the deal goes through it would strengthen the already strongfranchise Sandoz has in gene and cell therapies. Last month Sandozand Ciba-Geigy Ltd., also of Basel, Switzerland, agreed to a mergerthat would create one of the top pharmaceutical companies in theworld. Sandoz last year purchased Genetic Therapy Inc., ofGaithersburg, Md. Ciba owns nearly 50 percent of Chiron Corp., ofEmeryville, Calif., which has acquired San Diego-based Viagene Inc.

Sandoz also has a presence in the genomics area thoughcollaborations with a number of academic institutions. Ciba is in agenomics collaboration with Myriad Genetics Inc., of Salt Lake City.

SyStemix's lead technology centers around the isolation of asubstantially pure hematopoietic stem cell (HSC), calledCD34ThyLin, that has a number of potential applications. Separatingthose cells results in a purer product than selection of the broaderpopulation of CD34+ cells. HSCs are self-renewing and capable ofdifferentiating into all types of blood and immune system cells.

The Sandoz offer will be reviewed by three independent boardmembers at SyStemix. Sandoz holds six of 11 seats on the SyStemixboard, while company representatives have the other two. The fivenon-Sandoz board members then will decide what action to take onthe offer.

Wendy Hitchcock, chief financial officer at Palo Alto, Calif.-basedSyStemix, said the offer took company officials by surprise.

"We don't have any comment in terms of the [offer] price, and it'stoo early in terms of having a response," Hitchcock said. "We arepleased they continue to show a commitment to our technology andpeople. Beyond that we have to wait until events unfold."

Sandoz reported having $67.5 million at the end of 1995 with a netloss of $48 million. It said in filings that its cash should take itthrough mid-1997 at least. Hitchcock said SyStemix wascontemplating additional financing opportunities such as a stockoffering or corporate collaborations. At the end of 1995 SyStemixhad 250 full-time employees.

Last year SyStemix began a U.S. Phase I/II trial of HSCtransplantation for patients with cancers responsive to chemotherapy.The trial was suspended in December 1995 after treatment of ninepatients because of storage and handling issues, Hitchcock said. Newprocedures were adopted and are being used in an HSCtransplantation study that started in Europe two months ago.

SyStemix has gained FDA approval to begin an in uterotransplantation study targeting certain genetic defects. Hitchcock saidSyStemix, in collaboration with Sandoz, plans to start an HIV genetherapy trial later this year. The company is considering additionaltrials in breast cancers and autoimmune diseases.

All of the studies are using the same cells and process. "It's anincredibly powerful platform with great economic leverage,"Hitchcock said. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.