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Biotech / Medical : ARRIS - Another partner -- Ignore unavailable to you. Want to Upgrade?

To: F. Jay Abella, III who wrote (192)	11/3/1997 4:36:00 PM
From: tommysdad	Read Replies (1) \| Respond to of 353

If you don't mind an opinion from someone else: 1) Arris is not just a combinatorial chemistry company. It is a small-molecule company with combinatorial capabilities. 2) The combination of combinatorial chemistry (from Arris) with genomics (from Sequana) is THE hot ticket in lots of pharma companies these days (not just Biotech). BMS for example is betting very heavily on this. The idea is that with new molecular targets one has no history of what types of molecules interact with your newly found target. You therefore need to screen a lot of compounds (read: combichem) to find good leads, and if your lead comes from a combinatorial library, there is a good chance you can then optimize that lead with your (already inplace!) combinatorial group. 3) There are undoubtedly a lot of reasons ARRS went down today, but one is probably simple dilution. It's not like SQNA has anything in the clinic, and ARRS does. Each share of ARRS now represents less of those potential products from ARRS. That's undoubtedly an over-simplification, but probably part of the equation. Long term, this looks good for ARRS becoming a real company, but short term may not be great for current shareholders. I am not one of those but may become one because of this deal . . .

To: F. Jay Abella, III who wrote (192)	11/3/1997 4:37:00 PM
From: John Metcalf	Respond to of 353

People questioned the Khepri acquisition also, until the osteoporosis collaboration with Merck was announced. Sequana is coming with the Parke-Davis collaboration already visible. AxyS will have 28.8 million shares out, so would have a market capitalization of $316 mm at today's closing Arris quote. With $111 mm in cash and equivalents, the technology value of $205mm seems reasonable to me, particularly with a new potential $103mm collab. In regard to today's market action, arbitrage may account for the relative value of SQNA and ARRS. At the close, you could buy an AxyS share for $10.14 by buying Sequana, $11 if you bought Arris.