Medco Research Inc. and Repligen Corporation said Tuesday thatthey plan to merge in a $51 million stock deal that will supplyRepligen with sorely needed cash and Medco _ which now buys anddevelops promising agents for the marketplace _ with thetechnology and expertise to invent new drugs.

For Repligen, which is based in Cambridge, Mass., the deal amountsto a welcome reversal of fortune for a company so cash-strapped thatin the last year, in two separate reorganization efforts, Repligenterminated 145 employees, and halted research into an anti-HIVvaccine, RP400c, and the anti-cancer agent, AM285, for late-stagesolid tumors.

For Medco, based in Research Triangle Park, N.C., the merger meansit can plunge into biotechnology drug research without spendingyears building the necessary expertise and technology.

Brandon Fradd, an analyst with Montgomery Securities in SanFrancisco, said Repligen "had a certain amount of cash, but thatwasn't going to last forever _ and they weren't going to get anythingapproved very soon _ so they needed a partner. Medco could eitherbuild biotech capability or buy it. It looks like they bought it."

The chief executives of both companies told BioWorld Today thattheir firms have complementary research interests. Both have focusedprimarily on developing new drugs for heart disease and cancer.Repligen would also contribute expertise in immune-system research.

Repligen's president and CEO, Sandford D. Smith, said that byjoining forces, the two companies would be able to combine theirlists of products under development. The result, he said, is "a verydeep pipeline with products in all phases in clinical development."

Under the terms of the agreement, Repligen would transfer its total of15.3 million outstanding shares to Medco for $51.5 million worth ofMedco's common stock. Repligen would net about one-third ofMedco's shares, leaving 11.1 million outstanding after the merger,according to Repligen's Smith and Medco spokesman RichTammero.

The deal, however, is still subject to shareholder approval andexecution of a final agreement.

Smith said next year looks extremely promising for the hybridcompany that will result once a final agreement is signed. "Ourprojections indicate that the joint company will be profitable incalendar 1996," he said. "That will enable us to fund research anddevelopment from our own liquidity without being reliant on stockofferings."

On Wall Street, reactions were mixed: Medco's stock (AMEX:MRE)closed at $14, down $1.25, and Repligen's stock(NASDAQ:RGEN)increased $1 per share to close at $2.50 onTuesday.

Medco has two products that have received FDA approval, and fourthat are in various stages of development, according to a companystatement.

Adenocard, approved in 1989, is prescribed for the treatment ofsupraventricular tachycardia. Adenoscan, which was approved lastFriday, is a cardiac imaging agent that enables cardiologists to obtainmetabolic information without resorting to costly PET scanning.

Two other drugs are in Phase III trials. They are BiDil, a drug forpatients in congestive heart failure, and ViaScint, which is intendedfor metabolic cardiac imaging using standard hospital equipment. InPhase II trials are MEDR-640, a drug to reduce the damage frommyocardial infarction, and ATP, an anti-cancer agent.

Repligen has six products in various stages of development. The mostpromising is recombinant platelet factor, rPF4, which is in threePhase II clinical trials as a potential treatment for brain tumors,Kaposi's sarcoma and uncontrolled bleeding in coronary bypasspatients. In tumors, the drug combats the proliferation of new bloodvessels that nourish the tumor. In bypass patients, it counteracts theeffects of the anticoagulants used during surgery.

Among other products, Repligen also is developing a monoclonalantibody, h60.1, to lessen organ damage from acute inflammation;AM285, a small molecule that in preclinical trials has exhibited bothanti-tumor and anti-viral activity; and rProtein A, which is used indiagnostic kits to detect circulating antibodies. n

-- Steve Sternberg Special to BioWorld Today

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

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