11/11/99 Reuters Eng. News Serv. 11:58:00
Reuters English News Service
C) Reuters Limited 1999.
Thursday, November 11, 1999
UK: FDA warning seen pricing factor in Celltech deal.
LONDON, Nov 11 (Reuters) - A warning from the U.S. Food and Drug
Administration on one of drug company Medeva Plc's production facilities gave
bidder Celltech Chiroscience more negotiating power, industry sources said on
Thursday.
"It was clearly a factor in the pricing," a source familiar with the deal told
Reuters.
He said the FDA warning came in the last couple of weeks and it concerned its
facility in Speke, north England, and the influenza vaccine Fluvirin.
The FDA recently inspected the facilities and found deficiencies in control
and validation of some of the manufacturing processes used in the production
of Fluvirin.
"This was a new factor and was discussed in detail by both companies," another
source said.
Analysts were surprised to see Medeva agree to a 165 pence all-paper bid from
Celltech Chiroscience on Thursday, especially after it rebuffed two offers in
the last three months at around similar prices.
One of the offers, from Ireland's Elan Pharmaceutical Corporation , was a full
cash offer.
Medeva did not mention this separately to the market but in the merger
statement it said: "Medeva is in the process of replying to the FDA with a
detailed plan of response committing to make the necessary improvements to its
processes so that it is fully compliant with FDA regulations."
"The positive point in this is that it emerged at the end of the flu season,"
another source said.
Celltech Chiroscience would now try to bring necessary changes in Fluvirin's
manufacturing programme before the flu season starts in Spring 2000.
Celltech Chiroscience shares closed 8-1/2 down at 476-1/2p while Medeva's
shares closed three pence up at 156-1/2p. ((Arindam Nag, London newsroom +44
171 542 4017, fax 44 171 583 3769, arindam.nag@reuters.com)).
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