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Biotech / Medical : Chiroscience -- Ignore unavailable to you. Want to Upgrade?

To: Elayne Shochet Tatar who wrote (62)	6/15/1999 9:46:00 PM
From: Elayne Shochet Tatar	Read Replies (1) \| Respond to of 69

here's the article re merger from the Financial Times. General feeling is, apparently, approval. Wednesday June 16 1999 Companies News / UK & Ireland UK biotech groups agree $1.1bn merger By David Pilling, Pharmaceuticals Correspondent Celltech and Chiroscience yesterday agreed to form Europe's biggest biotechnology company by market capitalisation in a merger widely expected to herald rapid consolidation in the fragmented sector. The merger will create a company with one approved drug - Chirocaine, a local anaesthetic - as well as two drug candidates in late-stage development and eight further projects in the pipeline. The merger, which will be made on the basis of 62 Celltech shares for every 100 Chiroscience shares, values the new company at £696m ($1.12bn). Assuming no cost-cuts, Celltech Chiroscience will have 400 research staff and an R&D budget of £51m. The deal, which must be approved by both sets of shareholders, represents a premium of 13.1 per cent on Monday's losing price of 259p for Chiroscience shares. Celltech's shareholders will hold 52.4 per cent of the new company. "It's a defining moment for the UK sector," said Nick Woolf, biotech analyst at BancBoston Robertson Stephens. "There are no obvious cost- cutting synergies here, so it tells us that critical mass is important." Analysts said other UK companies, such as the ill-fated British Biotech, might now be expected to merge. The sector has been depressed for the past two years. Even news of the first drug approvals has failed to move share prices. Peter Fellner, chief executive of Celltech, will head the enlarged company. John Jackson, non-executive chairman of the new group, and Peter Allen, chief operating officer, also come from Celltech. John Padfield, chief executive of Chiroscience, will step down to become a divisional head at Nycomed Amersham, the Anglo-Norwegian life science company. His provisional acceptance of the job cleared the way for the merger, said people close to the deal. Chiroscience also announced it had found a marketing partner for Chirocaine, which was dropped by Zeneca on anti-trust grounds after the UK drug group's merger with Astra of Sweden this year. Dr Padfield said Chirocaine would be marketed in the US by Purdue Pharma and in all other areas, except Japan, by Abbott International. The deal was 50 per cent more beneficial to Chiroscience than that struck with Zeneca, he said. Analysts said the two companies were a good fit. Chiroscience's US-based gene-discovery technology would beef up Celltech's science, while the latter's strong medium-term pipeline would fill gaps in Chiroscience's portfolio. With £80m in cash in the bank, the new company was expected to make further acquisitions, they said. Flemmings advised Celltech and Lehman Brothers acted for Chiroscience. Celltech shares closed down 8½p to 464p, while Chiroscience rose 21p to 280p.

To: Elayne Shochet Tatar who wrote (62)	6/16/1999 8:03:00 PM
From: A.J. Mullen	Read Replies (2) \| Respond to of 69

Elayne, I'm not sure where I learnt about it first. Perhaps New Scientist. I do remember mentioning to a friend who works in Pharmacology who said that a friend of hers had just taken a job there becuase he was very impressed with the company. I've heard Chiroscience presnt at H&Q a couple of times. The first time I heard them, I sold my holdings and bought Sepracor with the proceeds. I had originally bought Chiroscience on the Chiral story, when I heard they had bought Darwin and were trying to expand into a fully fledged Pharma I thought they had delusions of grandeur. Sepracor seemd to be doing very well, sticking to its knitting. The next time I heard Chiroscience I was really impressed. They were selling impressive drug-discovery technology to Big Pharma while pushing ahead on their own in drug development. I bought back in (without selling Sepracor). News is a problem. i use two brokers, neither of which seems to follow Chiroscience with any zeal. One thinks a colleague has a note on the merger. If so, I'll pass on the gist of what is said. I'm not convinced about the critical mass argument for the merger, and the diversification is not necessary for investors. If I had wanted diversification, I could have sold some Chiroscience and bought Celltech with the proceeds. One could argue that diversification within a company gives stability to the company and security to employees, but those who crave that can work for Big Pharma. Along with increased stability goes reduced influence and chances of making a killing on options for employees. It is said that the two pipelines do fit well. Chiroscience has Chirocaine imminent and some promising leads, but little in the middle-future. Firstly, I would have expected a jump with announcement of the new deal with Chirocaine, that's now confused with the merger. Secondly, from what I remember, there are substantial hopes that Chirocaine's use will be expanded. Nevertheless, I doubt that I'll sell. The story's too good, even with the dilution. They have money and, with their size, can raise more. The trouble is (and I apologise for my free-associating), what CEO with an ambition to build a new Big Parma from scratch, leaves the company as part of the deal that makes it possible?