Hyseq and VARIAGENICS Announce Merger
Monday November 11, 6:01 am ET
- Building for the Future: New company Will Maximize Strong Cash Position and Experienced Management Team to Support Development of Novel Products -
SUNNYVALE, Calif. and CAMBRIDGE, Mass., Nov. 11 /PRNewswire-FirstCall/ -- Hyseq Pharmaceuticals, Inc. (Nasdaq: HYSQ - News) and VARIAGENICS, Inc. (Nasdaq: VGNX - News) today announced that they have entered into a definitive merger agreement.
The new company will leverage its substantial resources and its proven management team to develop biotherapeutic and molecular diagnostic products.
"The merger represents a value-creating opportunity to integrate the two companies' significant assets into a product-focused organization. Our integration team will immediately review the combined assets and establish new milestones that we will manage the new company toward," commented Dr. Ted W. Love, president and chief executive officer of Hyseq. "The new organization will leverage its substantial cash position to support the development of Hyseq's novel thrombolytic, alfimeprase, VARIAGENICS' cancer diagnostics program and other near-term revenue generating opportunities."
Dr. George Rathmann, current chairman of Hyseq's board of directors, will assume the chairmanship of the new company's board of directors. The new board will include an additional six members, three each from the existing boards of Hyseq and VARIAGENICS. Dr. Ted W. Love will serve as the president, CEO and board member of the combined entity.
The new company will be headquartered in Sunnyvale, California. Clinical operations and biotherapeutic research and discovery will reside in Sunnyvale, with molecular diagnostics development residing in Cambridge, Massachusetts.
The combined entity will take steps to help ensure that cash resulting from the merger will fund its operations through approximately December 2004. As a result the new company will have approximately 110-120 employees following the close of the transaction.
"We entered into this transaction in order to accelerate the development of the most promising products of both companies," commented Dr. George Rathmann, chairman of the board of Hyseq. "We believe that the new company will be in a position to advance a strong development program, establish premier partnerships and accelerate a significant pipeline."
The new company will leverage the following assets aimed at product development and accelerating revenue generation:
-- Alfimeprase, a novel acting thrombolytic currently in phase I clinical
trials
-- Robust biotherapeutic drug development pipeline based on proprietary
human gene sequences and associated intellectual property
-- Cancer diagnostics program
-- Proprietary SNP database to support molecular diagnostics development
-- Strong cash position expected to fund operations for at least two years
-- Strong partnerships with major pharmaceutical companies including
Amgen, Novartis, Kirin and Deltagen
"The integration of VARIAGENICS' molecular diagnostics program and pharmacogenomics expertise with Hyseq's clinical and drug development capabilities represent a natural next step in VARIAGENICS' development as a company," said Joseph (Jay) S. Mohr, president and chief business officer of VARIAGENICS. "We look forward to working with the Hyseq team and its highly regarded board of directors."
Under the terms of the agreement, each outstanding share of VARIAGENICS common stock will be exchanged for Hyseq common stock at an exchange ratio of 1:1.6451. This exchange ratio implies a purchase price for VARIAGENICS' shareholders of $2.22 per common share of VARIAGENICS, or approximately $55.9 million (including in the money options and warrants), based on the closing price of Hyseq shares on November 8, 2002.
The merger will be completed through a reverse triangular, stock-for-stock merger in which Hyseq will form a new wholly-owned subsidiary that will merge into VARIAGENICS. The surviving entity will then be merged upstream into Hyseq. Subsequently, Hyseq will change its legal name to a yet-to-be determined name. Hyseq's existing subsidiary, Callida Genomics, will remain a privately held, separately funded, majority owned subsidiary of the new company.
The board of directors of both Hyseq and VARIAGENICS approved the definitive merger agreement. The transaction, which is structured as a "tax-free" reorganization for federal income tax purposes, is subject to the approval of the shareholders of both Hyseq and VARIAGENICS, as well as other closing conditions. Selected stockholders of Hyseq and VARIAGENICS have agreed to vote in favor of the merger. Both parties will strive to complete the merger by the end of February 2003, at which time shares of the new company will trade on Nasdaq under a new stock symbol and yet-to-be determined company name.
Conference Call Information
Hyseq and VARIAGENICS will hold a conference call today at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss this announcement. To participate in the conference call, please dial 800-915-4836. A telephone replay of the conference call will be available through Monday, November 25, 2002. To access the replay, please dial 800-428-6051 for domestic callers, 973-709-2089 for international callers, and reference pass code 267576.
This call is also being webcast by CCBN and can be accessed at Hyseq's Web site at www.hyseq.com, CCBN's individual investor center at www.companyboardroom.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com).
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