Jim Shrine

Athena Neurosciences Inc. said it signed a definitive agreement toacquire privately held Genica Pharmaceuticals Corp. for Athenastock currently valued at about $21.15 million.

Genica, of Worcester, Mass., develops diagnostics for neurologicaldiseases. Athena would issue Genica up to 3.45 million shares ofcommon stock for the acquisition.

Athena (NASDAQ:ATHN), which also focuses on the neurologymarket, currently has about 20.8 million shares outstanding. Theacquisition, and another announced earlier this month, would givethe company about 24.5 million shares outstanding. Its stock closedunchanged Monday at $6.13 per share. (The news was released afterthe market closed.)

Genica, with a sales force of 11, will have 1994 sales of about $8million, and have its second consecutive profitable year, according toJohn Groom, Athena's president and CEO. Athena, which has threeproducts in the clinic and a fourth nearing the clinic, is expecting1994 revenues of about $32 million with a net loss of about $20million.

"We're building an important business opportunity in the field ofneurology," Groom told BioWorld. "We're targeting profitability in1996, and Genica will aid and assist us in that goal.

"Combined, we have the ability to make the Genica neurology testsfar more broadly available," Groom said. "We're both calling on thesame customer, and we're both very involved in the development ofpotential tests for Alzheimer's disease."

In addition to the business opportunity and synergy, Groom said athird reason for the merger was strategic. "The linking of therapy todiagnoses is going to be increasingly important," he said. "Unlessyou have a defined diagnosis, the therapy is not readily going to beprescribed to the patients."

Groom said two million of the shares involved in the proposedtransaction would be available for sale six months after the deal,which is expected to be finalized late in January. The others will notbe registered until April 1996, "allowing the market time to digestthe shares," he said.

Genica recently acquired the rights to an eye test that may be usefulin the diagnosis of Alzheimer's disease, which was developed byHuntington Potter of Harvard University. Athena also hasdiagnostics for Alzheimer's in development.

While Athena's principal focus is on Alzheimer's disease, it marketsand develops products for other neurological conditions. The SouthSan Francisco company expects $18 million in 1994 sales forPermax, for which Athena acquired U.S. sales and marketing rightsfrom Eli Lilly and Co., of Indianapolis. The dopamine agonist isused to treat Parkinson's disease.

Another drug, Zanaflex, is under FDA review for marketingapproval. It was developed to treat spasticity of spinal cord origin.That drug was licensed from Sandoz Pharma Ltd., of Basel,Switzerland. A drug is in Phase I/II trials for another spasticcondition, and Athena plans to go into the clinic next year with anantibody to treat flare-ups in multiple sclerosis patients.

Earlier this month Athena proposed acquiring Exemplar Corp., ofWaltham, Mass., for $100,000 in cash and 420,000 shares of Athenastock. Exemplar is involved in the research and development oftransgenic models for testing drugs for a variety of diseases,including Alzheimer's disease. n

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