Biotechnology's biggest corporate merger so far this year isexpected to debut later today as Scios-Nova Inc. emerges as thesuccessor to Scios Inc. and Nova Pharmaceutical Corp.

Scios' proposed stock acquisition of Baltimore-based Nova goesbefore shareholders of both companies this morning. They areexpected to approve. The meetings should also provide detailson the strategy the combined company intends to pursue tounlock the synergies both have claimed as the merger'srationale.

Analysts have pointed to the possible spinoff of some productareas that don't fit the merged company's core business. Therecould also be word on how consolidating two companies couldtrim the workforce of Scios-Nova. Nova has 178 employees andScios 189. The company will be headquartered at Scios homebase of Mountain View, Calif., with Baltimore serving as aresearch facility.

The merger has been nearly four years in the making and thesubject of one aborted walk to the altar, according to the proxystatement. Biotechnology investors David and Isaac Blech, whois a Nova director, first brought Scios (then called CaliforniaBiotechnology Inc.) and Nova executives together in late 1988.With no products then in advanced clinical trials, the twocompanies soon decided to go their own ways whilemaintaining informal contact.

Last March, the talks were rekindled at the suggestion of HansMueller, Nova's president and chief executive officer. The deal,which is valued at roughly $180 million, was announced onMay 13.

It's been promoted as a means to unite Scios' technologycapabilities and potential near-term products with Nova'ssmall-molecule chemistry, receptor technology, anti-inflammatory product leads, and existing product sales andsalesforce.

The merger was also seen as solutions to different problems foreach company alone. For Scios, the unmet challenge has been tomove products into the market. Nova, which generated about$39 million in 1991 sales on four products and has filed formarketing approval on a fifth, was troubled by a lack of cash.The merged company will have about $160 million in cash.

On the down side, some analysts suggest that the earlier stageof Nova's product development projects may slow Scios on theroad to profitability, but will widen the product line andprobably fatten the bottom line of the combined company bythe late 1990s.

Scios-Nova's combined product pipeline includes:

-- Auriculin, Scios' lead product, which is expected to enterPhase III clinical trials for kidney disorders later this year.Phase II clinical trials are aimed at two indications:nephropathy caused by radio contrast dye and acute renalfailure. Scios holds worldwide rights, which is covered by a U.S.patent.

-- Fibroblast growth factor (FGF) for treating soft tissuewounds, such as diabetic ulcers and pressure sores. This Scios-developed product is expected to enter clinical trials early nextyear. Scios has rights to the U.S. market and has licensedpartners for markets in Europe and the Far East, and alsocontrols a patent.

-- Insulinotropin, which Scios is developing with its licensee,Pfizer Inc., for treating type II diabetes. Unlike injectableinsulin, Insulinotropin regulates glucose levels by stimulatinginsulin release and overcoming insulin resistance. Analystsforecast it may enter Phase III trials by mid-1993.

-- Brain-derived natriuretic peptide (BNP) as a potentialtreatment for congestive heart failure could enter clinical trialsby year-end. Scios holds a U.S. patent.

-- Nova's lead leumedin compound, NPC 1669, entered clinicaltrials last spring in both an intravenous formulation fortreating septic shock and an enema version in treatinginflammatory bowel disease. Its work on leumedins andbradykinin antagonists interested Scios.

At earlier stages of development is Scios' five-year researchcollaboration with Marion Merrell Dow to develop potentialtreatments for Alzheimer's disease, which was the result ofScios' work on a transgenic mouse model for the disease.

The few analysts who have commented on the merger arepositive about its potential benefits.

"The merger further strengthens the company's technologybase and product pipeline," said a July 13 Cowen & Co. report.It forecasted a $9 million profit on $140 million in revenues in1995.

The Cowen report estimated the potential hospital-basedmarket for Auriculin at $250 million and the FGF wound-healing market at $500 million. Given continued clinical results,Auriculin and FGF are "on track for PLA filings in 1993 and1995 and U.S. launch in 1994 and 1996," it said.

As previously announced, Nova shareholders will receive 0.39share of Scios stock for each existing Nova share. Scios-Nova isto have 30 million shares outstanding following the merger.

Scios (NASDAQ:SCIO) closed Wednesday at $8.75, down 13 centsand off 25 percent from its closing price of $11.63 on May 13when the deal was announced.

Nova Pharmaceutical (NASDAQ:NOVX) closed unchangedWednesday at $3.50, off 22 percent since May 13.

-- Ray Potter Senior Editor

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