Stock of SyStemix Inc. jumped $19.75 to $53 Monday after thecompany announced that Sandoz Ltd. will acquire 60 percent ofSyStemix's common stock for $392 million.
Sandoz will acquire through a tender offer slightly more than 4million shares, or 49 percent, of SyStemix shares outstandingon a fully diluted basis for $70 per share.
The Swiss company will also make a $111 million equityinvestment through the purchase of about 2 million newlyissued shares of stock (NASDAQ:STMX) at $56 per share.
Upon completion of the deal, SyStemix will have 10 millionshares outstanding, placing the company's value at about $65per share.
The companies began discussing a collaboration in September,based on the fit between Sandoz's work on immunology andoncology and SyStemix's stem cell technology and its earlier-stage work on megakaryocytes, said Sandoz spokesman Dr.Craig Burrell.
SyStemix has just begun a pilot study of its stem cell separationtechnology using bone marrow from six donors. Purified stemcells recovered from the donors will be placed into mice and invitro assays to show that they work. The company hopes tocomplete within a year initial human studies of the process as abetter alternative to bone marrow transplants, using patientswith a variety of cancers.
The company hopes to begin similar trials in late 1992 or early1993 of purified megakaryocytes and their progenitors, whichgive rise to blood clot-forming platelets.
By valuing SyStemix at some $650 million, the deal looks sweetin comparison to some major deals this year. Cetus Corp., with amore developed product portfolio, was sold to Chiron Corp.(NASDAQ:CHIR) in July in a deal valued at $660 million,including $300 million in cash from the sale of Cetus'polymerase chain reaction technology. Cetus had $45 million insales of its cancer products 1990.
American Home Products Corp. bought 60 percent of GeneticsInstitute Inc. (NASDAQ:GENI) in September in a merger valuedat $666 million, giving GI a valuation of about $1 billion. At theclosing, AHP will pay about $40 for each share of GI.
The Sandoz deal "gives us $111 million, our independence andan association with one of the few pharmaceutical companiesthat's made a commitment to cellular therapy, as evidenced bytheir recent investment in Genetic Therapy Inc.," said LindaSonntag, SyStemix president and chief executive.
In November, Sandoz Pharma Ltd. paid $10 million, or $21.26per share, for a 6.1 percent equity stake in GTI (NASDAQ:GTII).The companies plan to develop and commercialize genetransfer technology based on GTI's system to deliver genes intotarget cells using viral vectors.
"Stem cells are the ideal vehicle for gene therapy," Sonntagsaid. "We have the stem cells and GTI has the vectors. The firsttarget we're interested in is AIDS. We have a SCID-hu mousethat can be infected with HIV and we have stem cells thatreconstitute the blood and immune system, including T cells.The idea is to insert anti-HIV genes into the stem cells andreconstitute the stem cells in the mouse."
The tender offer is expected to commence on or before Fridayand to close on Feb. 15. To ensure the success of thetransaction, Sandoz has an option to buy 4.5 million sharesfrom shareholders holding 54.6 percent of SyStemix's shares.The shareholders are E.S. Jacobs & Co., Aetna Life and CasualtyCo., company co-founders doctors Mike McCune and IrvingWeissman, and Sonntag.
Under the deal, Sandoz is prohibited from increasing itsholdings above 60 percent during the first seven years afterclosing and above 75 percent during years eight through 10.
However, Sandoz can bid for 100 percent of the company anytime after three years if the offer is recommended bySyStemix's independent directors. There is no set price for anoffer.
After the transaction, SyStemix's board will consist of amajority of Sandoz representatives, with the final number notyet determined.
SyStemix stock hit a 52-week trading high of $57 on Monday.Last month, after the company was issued a U.S. patent on Oct.31 for purified stem cells from bone marrow, the stock tradedas high as $56.25 before falling to $33 on Dec. 12. In August,the company completed its initial public offering, selling 2million shares at $18.
Shares of two other companies developing products based onpurified stem cells also rose Monday. Applied Immune SciencesInc. (NASDAQ:AISX) rose $2.50 to $23 and CellPro Inc.(NASDAQ:CPRO) gained $2.75 to $15.25.
Genetic Therapy closed up $1 at $16.75
-- Karen Bernstein BioWorld Staff
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