Cell Technology Inc. of Boulder, Colo., said Monday it agreed tobuy Pioneer Pharmaceuticals Inc. of Irvington, N.J., in a bid tobuild a specialty and over-the-counter drug business and playdown disappointing new drug development.
"We are definitely changing the complexion of our company,"William H. Critchfield, Cell Technology's vice president offinance and chief financial officer, said Monday. CellTechnology's new goal is to develop branded, proprietarypharmaceuticals and OTC products, Critchfield said.
With the purchase, Cell Technology will move development ofits lead anti-cancer drug, ImuVert, to a back burner and look tosell the program, Critchfield said. The move was precipitatedby disappointing clinical results for ImuVert, a biologicresponse modifier (BRM) derived from bacteria.
Meanwhile, sharp cutbacks are planned in BRM research,including some layoffs. About three-quarters of Cell Tech's 27employees work on ImuVert and its derivatives.
Cell Technology (NASDAQ:CELL) said it agreed to pay $5.5million in cash, equivalent to Pioneer's book value. The deal iscontingent on a vote in May by Cell Technology shareholders.
Pioneer, a unit of Dow Chemical Co.'s Essex Chemical Corp.,reported unaudited revenues of more than $6.5 million for theyear ended Dec. 31, 1990. It sells 22 generic prescription andOTC products, employs 60 people and has a New Jerseyproduction facility, which Cell Tech plans to expand.
In initial trials of ImuVert in 19 patients with brain cancer,three had a complete remission and four showed no furthertumor growth. However, none of the more than 100 patients inongoing expanded trials of ImuVert have experienced completeremission. About one-fifth are taking the highest tolerable doseof the drug.
The results were "underwhelming," said Robert Peterson, ananalyst with Hanifen Imhoff Inc. of Denver. "ImuVert is notgoing to have enough data to submit to the FDA (Food and DrugAdministration) for licensing," Peterson predicted. "CellTechnology is essentially bailing out of BRMs."
The cash outlay to acquire Pioneer would use about half of theapproximately $10 million of cash-equivalent assets that CellTechnology says it has. Peterson estimates that aftercompleting the acquisition in a few months, Cell Technologywill be left with about $4 million in cash.
Cell Technology's stock closed Monday at 75 cents a share,down 25 cents for the day, and near the low end of a 52-weektrading range of 50 cents to $3 a share. The company wentpublic in 1987 with the sale of 1 million units (of a share andwarrant) at $8 each. The stock peaked at $9.50 in late 1988.
Cell Technology announced last February plans to diversifybeyond BRMs through acquisition of other health carebusinesses or technologies. It signed joint research andlicensing option agreements last October covering BRMtechnology with companies in Spain and Israel.
-- Carol Ezzell Washington Bureau Chief
(c) 1997 American Health Consultants. All rights reserved.