For the second time in a week, Cangene Corp.'s board has beensurprised by the activities of Pharma Patch plc, a publicly traded Irishcompany. On June 2, the board learned through a press release thatPharma Patch had entered into a private agreement to acquire 14percent of Cangene's common stock. On Tuesday, another pressrelease informed the board that Pharma Patch intends to buy 100percent of Cangene's stock."To say I'm shocked and surprised is a fair statement," NancyBroadbent, Cangene's CEO, told BioWorld. "Neither Cangene nor itsboard has had any negotiations with Pharma Patch. The offer wasunsolicited. The board plans to meet as soon as possible to review theoffer and consider its alternatives."Paul Heney, Pharma Patch's Toronto-based corporate secretary, toldBioWorld that, with the first purchase of Cangene's stock almostcompleted, his company was ready to go forward with the largertransaction. He did not, however, indicate why his company actedwithout informing Cangene in advance. Calls placed to other PharmaPatch representatives by BioWorld to learn more about the move werenot returned Tuesday night.In a statement released by Pharma Patch, its chairman and CEO,Murray Watson, said that the opportunities from the combinedoperations of the two companies would come from two areas. He saidit would generate superior biopharmaceutical products by combiningCangene's proprietary production technology with Pharma Patch'sdrug delivery systems. It would also lead to enhanced efficiencies thatwould reduce overhead expenses.Broadbent said, however, that neither of Cangene's two lead productsis suitable for transdermal delivery. "Transdermal delivery isincompatible with our lead products so I am not quite sure what thebusiness rationale for the offer is. I haven't been able to identify anybusiness synergy whatever."Pharma Patch said its securities exchange take-over bid would offerCangene shareholders one freely tradable ordinary share of Pharma,represented by an American depositary receipt, for each three commonshares of Toronto, Canada-based Cangene. A depositary receipt is areceipt for the shares of a foreign-based corporation held in the vault ofa U.S. bank and entitling the shareholder to all dividends and capitalgains.Pharma said the transaction would be made by a registered exchangeoffer complying with both Canadian and U.S. laws."I don't think that sounds like a fair offer. I think it grossly undervaluesthe value of Cangene," Broadbent said, noting that she was speakingonly for herself, since the board has not yet met.Pharma said its bid, if successful, would involve the issue of 2,750,000of its ordinary shares, bringing its issued capital to 8,150,000 shares.The company said it also intended to apply for a listing on theAmerican Stock Exchange (AMEX). Broadbent said she could not saywhether this would benefit Cangene's shareholders since she had notseen the offer.Pharma's original offer to buy 14 percent of Cangene's stock wasscheduled for completion today. Pharma said the bid circular will bepresented to Cangene shareholders when approved by the U.S.Securities and Exchange Commission, which it anticipated by the endof June.Cangene has two lead products: Leucotropin, a granulocytemacrophage colony stimulating factor, and a nucleic acid sequence-based amplification diagnostic product used in HIV research and otherapplications. The company also has a licensing agreement with AkzoPharma International B.V. of Arnhem, the Netherlands.Pharma Patch (NASDAQ:SKINY) closed at $6.50 Wednesday, up 75cents. Cangene's (TSE:CNJ) stock dropped 25 cents, to $12.75. n

-- Philippa Maister

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