Medco Research Inc. and Repligen Corp. ended attempts to revive amerger that was announced in May and put on hold last month whenMedco decided the initial $51.5 million price tag for the Cambridge,Mass. biotechnology company was too high.

Roger Blevins, Medco's chief operating officer, said Tuesday the twocompanies could not reach agreement on the value of Repligen,which Medco decided June 30 was "materially below" the amountstated in a May 22 letter of intent to merge.

In the original takeover proposal, Medco, of Research Triangle Park,N.C., agreed to swap $51.5 million worth of its stock for theoutstanding shares of Repligen.

Blevins also said part of the decision to terminate negotiations wasdriven by pressure from shareholders, who felt Medco was over-extending itself in acquiring Repligen. He would not rule out revivingdiscussions with Repligen in the future.

Repligen's chief operating officer, Avery Catlin, agreed with Blevins'assessment of the failed talks.

"Repligen is disappointed we didn't complete the merger," Catlinsaid. "But we will move on. In the next couple of weeks we willreview our business strategies."

Repligen sought a buy out by Medco to offset dwindling cashresources. In the past year, Repligen restructured twice, laid off 145employees and discontinued two research programs.

Catlin said Tuesday the company has enough cash for 12 months ofoperations based on a downsizing in February that reducedRepligen's burn rate to $1 million per month. He said no immediatechanges in programs or personnel will result from not completing themerger.

Medco's motivation for the acquisition was expansion intobiotechnology drug development with Repligen's pipeline of sixproducts. However, Blevins said Medco shareholders felt the timewas not right for such a move.

"For the near term," he said, "Medco will focus on the launch of thecompany's second product, Adenoscan," which was approved by theFDA in May and is being marketed in the U.S. by Medco's corporatepartner, Fujisawa USA Inc., of Deerfield, Ill. Adenoscan is a cardiacimaging agent and one of two Medco products approved formarketing. The other is Adenocard, a treatment for supraventriculartachycardia.

Blevins noted Medco also expects to file two new drug applicationsby the end of this year: BiDil, for congestive heart failure, andViaScint, another cardiac imaging agent.

Following its restructuring earlier this year, Repligen hasconcentrated its resources on its lead product, recombinant plateletfactor (rPF4), for cancer and cardiovascular treatments.

Medco's stock (AMEX:MRE) closed Tuesday at $14.75, up 75 cents.Repligen (NASDAQ:RGEN) ended the day off 12 cents to $1.37. n

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