Gaithersburg-based MedImmune Inc., one of the nation's few profitable biotechnology companies, said yesterday that it plans to buy U.S. Bioscience Inc. so it can move into the oncology market.
The proposed stock swap deal values U.S. Bioscience of West Conshohocken, Pa., at $492 million, or $16.50 a share. U.S. Bioscience shares rose $2.625 to $14.125 yesterday. MedImmune rose $7.1875 to $109.25.
"This acquisition further solidifies MedImmune's commitment to the field of oncology," said Wayne Hockmeyer, chief executive officer at MedImmune.
Robert I. Kriebel, chief financial officer of U.S. Bioscience, said the company was not actively seeking a merger. MedImmune approached the company about a deal.
"This is a strategic transaction for them," he said. "They get our expertise in drug development and commercialization, and we are aligned with a great company.
"Shareholders will get a substantial premium for their investment."
Flush with cash from its sales blockbuster, the anti-viral drug Synagis, MedImmune has been on an acquisition hunt for companies or developmental-stage drugs that might help it expand its product pipeline and diversify beyond its infectious-disease and organ-transplant niche.
Earlier this year, it took an equity stake in a small California company to co-develop four experimental drugs.
Analysts also noted that the U.S. Bioscience deal is part of a trend of mergers and acquisitions this year in the biotechnology industry.
"We like this deal; it's a good fit" for MedImmune, said Lesley Wright Marino, a biotechnology analyst with BancBoston Robertson Stephens in New York. "I'm not a bit surprised that they went after an oncology company," Marino said. "U.S. Bioscience has several approved drugs, some of which could potentially be big."
Marino said MedImmune's skill in positioning and marketing drugs should be a good match for U.S. Bioscience's approved drug portfolio.
MedImmune also has considerable expertise in the antibody field, a growing area of interest for potentially treating cancer.
In the merger, MedImmune gains three U.S.-approved drugs: Ethyol, which reduces side effects of chemotherapy and radiation in lung and ovarian cancer patients and is U.S. Bioscience's biggest seller; Hexalen, a treatment for ovarian cancer; and NeuTrexin, used for treating pneumonia in people with impaired immune systems.
U.S. Bioscience, which went public in 1991, lost $9.5 million on sales of $27 million last year. It also has more than $50 million in cash and investments.
MedImmune said it did not expect the addition of the U.S. Bioscience sales to affect earnings in fiscal year 2000, but to boost them after. The deal is not expected to close until late this year or early next.
Along with gaining U.S. Bioscience's 80 cancer and AIDS researchers, MedImmune will acquire the company's 30-member oncology sales and marketing group. U.S. Bioscience also owns a manufacturing facility in the Netherlands.
During the first quarter of this year, U.S. Bioscience raised $20 million in a private placement with three venture capital firms.
The $492 million merger valuation is based on an average MedImmune share price of $110 during a 20-day trading period three days prior to a U.S. Bioscience shareholder meeting to discuss the merger.
Under that scenario, U.S. Bioscience shareholders would get 0.15 share of MedImmune common stock for each U.S. Bioscience share held.
Terms would change, however, should MedImmune's average share price hit specific averages that are higher or lower than the $110 average.
U.S. Bioscience would pay MedImmune a $15 million break-up fee and $2 million in expenses if the deal does not close.
Pub Date: 9/23/99