NEW YORK -- Enzon Inc. has agreed to acquire financiallystrapped Genex Corp. in a stock deal worth about $13 million,the companies announced Wednesday.

The acquisition of Genex, a protein-design company, givesSouth Plainfield, N.J.-based Enzon the capability tomanufacture proteins for which it previously had to rely onoutside sources. Enzon will save the two years that it wouldhave taken to develop these capabilities in-house, R. DouglasHulse, Enzon's vice president for business development, toldBioWorld.

In addition to Genex's protein engineering, fermentation,purification and scale-up capabilities, the acquisition allowsEnzon to accelerate development of "pipeline" products, saidGail Wasilewski, vice president and chief financial officer.Enzon will submit three new substances for investigationalnew drug trials in the next year, she said in a presentation tothe Industrial Biotechnology Association's annual financialconference here.

Morgan Stanley & Co. analyst Michael Sorell predicted thestock (NASDAQ:ENZ) should climb to $15 in the near future. Itclosed at $8.75 on Wednesday, down 25 cents.

Enzon will acquire Genex (NASDAQ:GNEX), located inGaithersburg, Md., for about 701,000 shares of Enzon's commonstock and 583,000 three-year warrants to purchase Enzoncommon stock at an exercise price of $18 per share.

The warrants are worth about $6.75 million, according toHulse. Based on Wednesday's closing stock price, this wouldmake the total deal worth about $12.9 million.

Enzon's products are based on its patented PEG technology, asystem that enhances the circulating life of proteins in theblood. Enzon's Adagen, a PEG-based treatment for severecombined immunodeficiency disease (SCID), is the soleprotein-based drug delivery system on the market.

Wasilewski said the company will be profitable one year afterits PEG-L asparaginase is approved. Enzon submitted a productlicensing application in January for PEG-L-asparaginase totreat children with acute lymphoblastic leukemia.

-- Steve Usdin BioWorld Washington Bureau

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