American Cyanamid Co. and Immunex Corp. announced lateTuesday that they will create a new biopharmaceuticalcompany, still named Immunex Corp. and still located inSeattle, by merging Cyanamid's North American LederleLaboratories oncology business with Immunex (NASDAQ:IMNX).

Cyanamid (NYSE:ACY) will also contribute $350 million in cashto the new company. Immunex shareholders will receive $21 incash per share, totaling $380 million, plus one share of newImmunex stock. Immunex shareholders will control 46.5percent of the new company, while Cyanamid gets 53.5percent. Cyanamid of Wayne, N.J., can increase its ownership ofthe new company to 70 percent via stock purchases.

The transaction is still subject to the approval of Immunex'sshareholders, who will get a chance to cast their votes duringthe second quarter of 1993.

"We can now exercise the option to purchase Receptech Corp.(NASDAQ:RECPC), which we formed to commercialize productsfrom Immunex research, for $60 million in cash instead ofstock," said Stephen Duzan, Immunex's chief executive officer.

Indeed, Immunex also announced Tuesday that it will purchaseall outstanding shares of Receptech common stock for $26 ashare. Receptech shareholders will get their payments within60 days of the date of record, Dec. 22. Immunex said it willaccount for the cost of the buyback, $59.4 million, as a one-time charge against 1992 earnings.

"After a six-month strategic review of our business, wedetermined that Immunex needed to increase its spendingsignificantly to achieve its objectives," Jason Rubin, Immunex'svice president of communications, told BioWorld. "We wereprepared to implement this strategy as a completelyindependent company, but we decided to explore otheralternatives to complement our oncology focus, strengthen thefinancial situation, expand the revenue and customer base,support a highly productive research team, and maintain ourunique corporate culture," Rubin explained.

Analyst Brandon Fradd, of Montgomery Securities, sees themerger as "very positive" for Immunex. "It brings Immunexinto profitability; they get 3.5 times more cash (than they had),and a larger sales force without taking away the inherent valueof the products in their development pipeline."

Moreover, Fradd told BioWorld, "there's no cap on a buyout opposed to the situations with Genentech (Inc.) and GeneticsInstitute (Inc.). That is, there's no predetermined price atwhich Cyanamid could completely purchase the company."

The merger creates the second-largest oncology company inNorth America, according to Cyanamid Chief Executive OfficerGeorge Sella Jr. Cyanamid's North American oncology businessshould have 1992 sales of $115 million, Sella added.

Current Immunex management will stay on at the "newImmunex," although Duzan will remain during the transitionperiod only.

Immunex stock closed Tuesday up 50 cents a share to $45.25.

-- Jennifer Van Brunt Senior Editor

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

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