Toronto-based Cangene Corp. has succeeded in its effort to hold-off ahostile takeover bid by Pharma Patch plc.Pharma Patch, based in Ireland, withdrew an offer late last weektrading one of its shares for three shares of the Canadian biotechnologycompany's stock.Pharma Patch's offer was due to expire Friday. It ended the raid afterCangene early last week urged shareholders to reject the offer anddeveloped a "permitted bid" shareholder protection rights plan.Cangene also had announced that investors controlling about 41percent of the company's stock agreed not to sell.Under the shareholder protection plan, Cangene threatened to dilute itsstock by issuing more shares at a reduced price if Pharma Patchsucceeded in gaining control.Pharma Patch officials could not be reached for comment. In aprepared statement, the company said, "We don't believe that inimplementing the 'poison pill' Cangene's board of directors is acting inthe best interests of Cangene or its shareholders. It's sole purpose is toimpede the success of our offer, or any unsolicited offer, and toentrench the incumbent management."Cangene has said it considered the Pharma Patch offer financiallyinadequate and that there was no "synergy between Pharma Patch'stechnology and Cangene's products in development."On June 2, Pharma Patch acquired 14 percent of Cangene and five dayslater made its bid to buy all of Cangene's stock. Pharma Patch gaveCangene shareholders six weeks to decide. The offer was contingent ongaining control of at least 90 percent of Cangene.Doug Miehm, an analyst with Marleau, Lemire Securities in Toronto,told BioWorld that Pharma Patch likely will keep its 14 percent interestin Cangene. He said Pharma Patch had indicated its bid was aimed atboosting the value of Cangene's technology.Another analyst, who asked not to be named, suggested Pharma Patchwas trying to raise cash by trading its stock for Cangene's, rather thanconducting a public offering of its own shares.Miehm said if Pharma Patch's takeover had been successful, it not onlywould have gained Cangene's technology, but also about $10 million incash.Cangene officials confirmed Monday they have about $10 million inthe bank, which is enough to keep operating for another year. Thecompany's burn rate is about $700,000 a month.Cangene (TSE:CNJ) is developing drugs and nucleic acid-baseddiagnostics. It has one drug in Phase II/III clinical trials in Canada andapplications of its diagnostic technology are being commercializedthrough a Netherlands-based partner, Akzo Pharma International.Pharma Patch (NASDAQ: SKINY) develops transdermal drug deliverysystems through its Toronto-based subsidiary, Medipro Sciences Ltd.On Monday, Pharma Patch's stock closed at $3.63 per share, down 63cents, and Cangene's stock was at less $2 Canadian (about $1.40 U.S.)per share. n

-- Charles Craig

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