Sandoz Ltd.'s $295 million definitive merger agreement with GeneticTherapy Inc. appears to be going off as planned as GTI's stock valueclosed Monday near the buyout price offered by Sandoz.

GTI's stock (NASDAQ:GTII) closed Monday at $20.88 per share, up$5.63. Sandoz, of Basel, Switzerland, offered $21 per share for the12.6 million GTI shares it doesn't already own. That Sandoz alreadyhas a $21-per-share option with holders of 32 percent of GTI's stock,and that the GTI board recommended acceptance of the offer, make itappear that the deal will go through without problems.

Biotechnology analyst Matthew Geller, of New York-basedOppenheimer & Co., said gene therapy companies now are attractive topharmaceutical companies, which have more time than most investorsto wait for the technology to develop. "A lot of drug companies want toget into gene therapy," he said. "They see it as the future of theindustry."

In April, Chiron Corp., of Emeryville, Calif., and gene therapycompany Viagene Inc., of San Diego, agreed on a $95 million stockand cash buyout for the 83 percent of Viagene that Chiron didn't ownalready. With Monday's news about the GTI offer, the stock values ofother gene therapy companies also went up. Vical Inc.(NASDAQ:VICL), of San Diego, was up 63 cents at $9.38; TargetedGenetics Corp. (NASDAQ:TGEN) was up 63 cents to $4.50; andSomatix Therapy Corp. (NASDAQ:SOMA) was up 63 cents at $4.63.

GTI's patent positions might have contributed to the $295 million cashoffer. In March GTI received an exclusive license from the NationalInstitutes of Health for a broad issued patent covering ex vivo genetherapy. Since many gene therapy approaches use ex vivo technology,the patent could have far-reaching implications. GTI in May gotexclusive worldwide rights to a patent application covering a method totreat brain tumors using a herpes simplex-thymidine kinase gene (HS-tk)/ganciclovir gene therapy method.

Sandoz and GTI already were collaborating in the HS-tk area, and havePhase I/II trials ongoing in inoperable and operable malignant braintumors.

Sandoz offered a 38 percent premium to GTI's Friday closing price of$15.25. In the past year the stock has had a low of $6 and a high of$15.88. n

-- Jim Shrine

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