The PR -
PRINCETON, N.J., and SOUTH SAN FRANCISCO, Aug. 22 /PRNewswire/ -- Pharmacopeia, Inc. (Nasdaq: PCOP - news) and Eos Biotechnology, Inc. today announced that their Boards of Directors have unanimously approved an agreement under which privately held Eos will merge with Pharmacopeia in a tax-free, stock for stock transaction. Based on Pharmacopeia's closing stock price of $18.51 on August 21, 2001, the transaction is valued at approximately $197 million, including the value of shares to be issued upon the exercise of stock options to be assumed in the transaction. Included in the transaction value is $44 million of cash owned by Eos.
The transaction unites Eos' drug target identification and validation expertise and therapeutic antibody development skills with Pharmacopeia's integrated small molecule drug discovery capabilities. The combined technologies will create a powerful platform for the identification and validation of drug targets and the discovery of small molecule and therapeutic antibody treatments for cancer, angiogenesis, inflammation and other diseases.
Eos' Strengths
Eos brings leading edge, genomics-based drug discovery technology and expertise to the combined company including:
-- Genomics toolset for the discovery of proprietary targets - Eos'
internally developed toolset includes 1) a GeneChip(TM) array
containing greater than 90% of all human genes on a single chip; 2)
robust gene expression databases containing more than 1 billion
datapoints from both diseased and normal tissues; and 3) a
proprietary bioinformatics platform to identify disease-specific
gene activity.
Eos has identified hundreds of disease enriched and specific targets
from several major cancers and angiogenesis, the process of blood
vessel formation. Currently, 90 of these targets from 6 of the most
common cancers and angiogenesis are in the validation process or
development pipeline at Eos.
Eos has entered into major research and development collaborations
with Biogen and Aventis-Pasteur for the discovery and validation of
targets for therapeutic antibodies and vaccine therapies,
respectively.
-- Gene expression data - the gene expression data generated by Eos'
genomics toolset is a powerful asset for the internal discovery of
proprietary targets. Future opportunities to commercialize these
data and the related proprietary bioinformatics platform will be
exploited.
-- Methods to develop antibody therapeutics - through collaborative
arrangements, Eos has broad access to fully human antibodies, as
well as internal capabilities to humanize antibodies made in
non-human species. Additionally, Eos has broad access to
technologies that couple extremely potent chemotherapeutic drugs to
antibodies developed at Eos, thus allowing the potent chemical agent
to destroy diseased cells while sparing normal tissues.
Eos has a lead candidate antibody that is believed to inhibit the
pathologic process of angiogenesis. This antibody candidate is now
in preclinical development and Eos anticipates that it should be
ready for clinical development next year. Eos' pipeline should
yield multiple therapeutic candidates moving toward the clinic over
the next several years.
-- Small molecule rights to targets - Eos' target selection and
validation processes are also used to identify small molecule
"ready" targets. The company believes that, to date, approximately
30% of the 90 therapeutic antibody targets identified by Eos may
represent target structures also appropriate for small molecule
drugs that can be taken in tablet or capsule form.
-- Experienced management team - Led by David W. Martin, M.D., Eos'
management team is comprised of highly skilled experts in the fields
of biological and genomic research.
Joseph A. Mollica, Ph.D., Pharmacopeia's Chairman, President and Chief Executive Officer said, ``Today marks a major milestone in the evolution of Pharmacopeia towards a complete and fully integrated drug discovery business that, over time, will afford higher revenue and growth opportunity. Eos has designed and built an integrated platform of custom genomics-based tools used to discover and validate targets and to discover antibody therapeutics that are highly specific in the treatment of cancer, angiogenesis, and inflammatory disease.
``By combining Eos' skills and assets with Pharmacopeia's leadership in experimentation, computation, and informatics products, our combined company will have the full spectrum of drug discovery capabilities from target discovery and validation, through lead discovery, enhancement and optimization. The combination will also create many new scientific and business opportunities not currently available to either company. Furthermore, there is a high level of complementarity between the excellent management teams and the world-class scientists of both organizations.
``While historically Pharmacopeia's services have been provided to support our customers' drug discovery goals, we will now be able to set our own objectives and, importantly, move up the 'value chain' in our drug discovery business. In short, our combined company will have all the science, technology, partnerships, and management in place to create a full-fledged drug discovery company,'' Dr. Mollica concluded.
David W. Martin, M.D., President and Chief Executive Officer of Eos said, ``I am very excited about today's announcement and the potential it represents for our combined company. We will have the genomics, biology, chemistry, human resources, finances and facilities to achieve our drug discovery goals. With our joint resources, we will be able to fully leverage the genome for discovering and validating novel molecular targets, and for generating antibody and pharmaceutical therapeutics directed towards those targets. In addition, through partnerships for advanced preclinical and clinical development, we intend to develop product candidates at least through Phase 2(a) of clinical trials.
``Eos' established partnerships with industry leaders such as Biogen, Aventis, and Medarex validate our technology and will provide funding and technology access going forward. Furthermore, we see long-term opportunity in allying ourselves with Pharmacopeia's Accelrys unit to provide additional offerings that will grow revenues and enable Accelrys' customers to be more productive in their drug discovery efforts. I look forward to working with Joe and his team to aggressively grow the product pipeline and to realize the extraordinary potential of our two great companies.''
Benefits of the Transaction
The combination of Pharmacopeia and Eos is expected to create opportunities not currently available to either company alone. These include:
-- Powerful combination of genomics, biology and chemistry - The
combined company will seek to discover and develop its own
therapeutics against proprietary targets. In addition, the
combination will also allow Pharmacopeia to exploit intracellular
targets from Eos' genomics-based analysis that are not useful as
antibody targets but are precisely the kinds of small molecule
targets with which Pharmacopeia has demonstrated success.
-- Additional Accelrys software offerings - The combined company
intends to offer complete genome expression databases and
proprietary bioinformatics software solutions through the Accelrys
sales and marketing infrastructure. These additional tools are
expected to enhance the quality of Accelrys' product offerings and
drive future revenue growth.
-- Partnering opportunities - With specific therapeutic expertise in
cancer, angiogenesis, and inflammation, antibody therapeutics,
monoclonal antibody-validated small molecule candidates, and
pre-clinical and/or clinical data, the combined offering will be a
more powerful supplement to a partners' discovery efforts than
either company can currently offer.
-- Speed to Clinic - Eos' proven antibody approach could rapidly
generate a steady stream of therapeutic candidates for clinical
evaluation. A lead candidate antibody that inhibits the pathologic
process of angiogenesis may enter clinical development as early as
next year.
Terms of the Transaction
Under the terms of the agreement, and based on Pharmacopeia's current stock price, Pharmacopeia would issue approximately 10 million shares of common stock and assume options and warrants to acquire an additional 600,000 shares of Pharmacopeia common stock. Included in the transaction value is approximately $44 million in cash owned by Eos. If Pharmacopeia's average stock price, computed at closing, is below $14.89 per share or a transaction value of $158.5 million, then Pharmacopeia will pay the difference between the average closing price and $14.89 per share in cash, subject to a right to terminate if the cash consideration exceeds $33.5 million. In the event that the cash consideration exceeds $63.4 million, Eos will have the right to terminate the transaction. If Pharmacopeia's average stock price is above $20.00 per share, or a transaction value of $213.0 million, Pharmacopeia will issue a number of shares and options equivalent to a transaction value of $213.0 million. The transaction is intended to be tax-free.
The transaction is subject to customary closing conditions, including regulatory approval and approval by the stockholders of Pharmacopeia. A majority of the stockholders of Eos has voted to approve the merger. The transaction is expected to close during the fourth quarter of 2001.
Upon completion of the transaction, Eos will become a wholly owned subsidiary of Pharmacopeia. Dr. Mollica will remain as Chairman, President and Chief Executive Officer of Pharmacopeia. Dr. Martin, currently President and Chief Executive Officer of Eos, will become President of Pharmacopeia's drug discovery operation, which will include Eos. This unit will focus on drug discovery, collaborative research and development, and genomics research. Pharmacopeia's Board of Directors will be expanded to include Dr. Martin and Nicholas J. Pritzker, the current chairman of Eos' Board of Directors.
Guidance
Assuming the close of the Eos transaction in the fourth quarter of 2001, the Company issued the following guidance with respect to expected financial results for 2002 and beyond. Pharmacopeia expects combined drug discovery revenues in excess of $45 million in 2002 and drug discovery pro forma operating losses approaching $30 million, excluding acquisition related charges. The company anticipates that collaborative drug discovery revenue growth would accelerate thereafter as the Company adds more and larger collaborations and begins to out-license the later stage internally funded projects. Pharmacopeia expects its drug discovery business to begin showing profits in 2004 at which point the effect of the merger is expected to be neutral to earnings. Thereafter, the merger is expected to be accretive.
The Company also noted that the proposed merger will not dilute the financial results of Accelrys, Pharmacopeia's software business. Pharmacopeia expects 2002 Accelrys organic revenue growth in excess of 20% driving pro forma operating profits, excluding acquisition related charges, of about $15 million. Looking ahead, the opportunity to sell Eos' proprietary biological and chemical data content through Accelrys' strong distribution channels should enhance the revenue growth trajectory and profitability of the software business.
While its current priority is the successful completion of the Eos merger, Pharmacopeia reiterated its intent to consider the eventual separation of its Accelrys software business from its drug discovery business. While the Company continues to see significant synergies between computational software development and experimental research, it believes that there are other corporate scenarios that would allow for productive inter-relationships while still allowing the value of each business to be optimized. Among the strategic alternatives under consideration is an initial public offering of Accelrys.
UBS Warburg acted as financial advisor and Dechert acted as legal counsel to Pharmacopeia. Robertson Stephens, Inc. acted as financial advisor to Eos, Dresdner Kleinwort Wasserstein, Inc. provided a fairness opinion to the Eos Board and Debevoise & Plimpton acted as legal counsel to Eos.
Eos Biotechnology, a privately funded biotechnology company in South San Francisco, develops, applies and integrates a variety of high-throughput genomics, bioinformatics and biological processes for the creation of novel therapeutic and diagnostic products. Eos technologies are being applied to rapidly and cost-effectively build a pipeline of novel and medically important therapeutics and diagnostics in the areas of oncology, angiogenesis and inflammation, with initial product development efforts focused in the area of therapeutic antibodies. Further information about Eos and its programs is available at eosbiotech.com |
