Genetics Institute Inc. said Thursday that about two-thirdsof SciGenics Inc. shares were tendered and accepted forpayment prior to the midnight Wednesday deadline.
Genetics Institute, of Cambridge, Mass., paid $14 pershare for the approximately 1.4 million shares that weretendered. Those shareholders not accepting the offer willget $14 per share upon the acquisition's closing, if theydon't challenge the offer. The buy-back of all 2.1 millionshares would cost Genetics Institute about $29.3 million.
SciGenics was spun off from Genetics Institute in 1991 toresearch and develop recombinant macrophage colonystimulating factor (M-CSF) and embryonic growth andregulatory proteins (EGRP). M-CSF development wasstopped in the two lead indications because of lack ofefficacy, and the EGRP program never got past an earlystage effort, Genetics Institute officials said.
Some of the SciGenics shareholders opposed the $14offer, particularly in that it came in June 1995, wellbefore May 1996, when the parent company had a calloption of $69.83 per share. (See BioWorld Today, Sept.15, 1995, p. 1.)
One of the investors, Mark Lampert, a general partner atSan Francisco-based Biotechnology Value Fund L.P.,said he is contemplating various actions. His firm, whichheld about 10 percent of SciGenics, and New York-basedMentor Partners L.P., which owned nearly 13 percent, didnot tender their shares.
"Obviously if we thought SciGenics was worth only $14,we would have tendered," Lampert said. "We areexploring a variety of options, including seeking appraisalof our shares as provided under Delaware law. Webelieve a court may well decide that fair value is closer toGI's $70 contractual price than to their low-ball offer of14."
Dennis Harp, director of corporate communications forGenetics Institute, said, "We believe the $14 offer wasindeed a fair offer, and there is a reasonable probabilitythan an appraiser may determine the value to be less than$14."
Harp said, "We'll discontinue the M-CSF program, andhave the flexibility to wind down the EGRP program ninemonths earlier and explore options of redeployingresources."
Harp said the EGRP focus was on the pancreas,specifically in finding factors that stimulate thedevelopment and growth of pancreatic beta cells, whichrespond to and produce insulin. "We concluded after fourand a half years that we're still a long way away fromhaving a product," he said.
SciGenics' largest shareholder, with about 44 percent,was West Highland Capital Inc., of Greenbrae, Calif.Officials there opposed the $14 offer initially, buttendered their shares before the deadline. One top officialat West Highland said the company had no comment.
Genetics Institute's stock (NASDAQ:GENIZ) gained 75cents Thursday to close at $37.25. n
-- Jim Shrine
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