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Executive Summary

CooperBiomedical is looking to spin-off either its diagnostic or therapeutic businesses with the possibility of putting that business segment up for sale, the company noted in a May 7 filing with the Securities and Exchange Commission. The company is "actively pursuing, through its investment bankers, various alternatives for restructuring its business so as to minimize long-term research, manufacturing and distribution costs," the prospectus says. Options include "the spin-off of either its therapeutic business or its diagnostics business as a separate corporation which may subsequently merge or enter into a joint venture with a third party." CooperBiomedical also is considering the sale of equity in either or both business units to a third party, including the public and/or CooperVision, the company adds. CooperBiomedical anticipates "substantial losses" for fiscal 1985, due to cost containment pressures on its diagnostics business and a decision to accelerate development of therapeutic products, the prospectus notes. As a result, the company is seeking both to cut costs in-house and to find funding from external sources. Possible outside funding options include the sale of non-strategic assets, R&D partnerships, joint research and marketing agreements, joint ventures, and/or long-term debt financing, CooperBiomedical says. Since its inception in 1980, CooperBiomedical's profit margins have been steadily shrinking due to enormous growth of operating expenses, selling, general ad administrative expenses, and, to a lesser extent, R&D costs. In FY 1984 ended Oct. 31, CooperBiomedical reported a 73% jump in sales to $87.8 mil., while net earnings fell by 73% to $1.4 mil. In the most recent quarterly results, CooperBiomedical reported a net loss of $4.9 mil. on flat sales of $20.3 mil. for the three months ended Jan. 31. CooperBiomedical's therapeutics business segment does not yet have a product on the market. The firm's leading compound is rDNA-derived alpha-I antitrypsin, which may have use in the treatment of emphysema. In January 1984, CooperBiomedical received orphan status for the compound in patients genetically deficient of alpha-I antitrypsin. Human clinicals for the orphan indication "may be initiated later this year," the filing notes. CooperBiomedical also has an antiviral research agreement with the University of Texas, a research contract for the development of drug delivery technology with Liposome Technology, and is collaborating with the Natl. Foundation for Cancer Research in the investigation of a new class of immunomodulator anticancer agents, the filing says. The CooperBiomedical filing covers one of the first steps toward Cooper's planned liquidation -- - the elimination of intercompany debt prior to spinning Biomedical off completely. The SEC filing registers 7.1 mil. shares of common stock. Simultaneously, the company is issuing nontransferable rights to shareholders to subscribe for shares, at the rate of two shares for each five shares held, the prospectus explains. Each right entitles the holder to purchase one share of CooperBiomedicaal at $3.25 apiece. Parent company Cooper Labs, which holds 84.5% of CooperBiomedical or 15 mil. shares, will exercise all of the rights issued to it, purchasing 6 mil. of the 7.1 mil. shares being offered for $18.25 mil., the filing adds. CooperBiomedical estimates its total net proceeds from the offering will be about $22.9 mil., which will go primarily to reduction of debt to Cooper Labs. Also in preparation for its upcoming liquidation, Cooper Labs filed a registration statement covering the distribution of 16.8 mil. shares of Cooper LaserSonics shares to Cooper shareholders. In December, Cooper said it expected that a distribution of assets under the liquidation would include the firm's interests in CooperBiomedical, Cooper LaserSonics, a land development company and between $3 and $5 per share of cash and cash equivalents in the form of marketable securities. Cooper must liquidate by June 28 in order to avoid paying approximately $48 mil. in taxes on the sale of its Oral B line to Gillette and its dermatological line to S.C. Johnson last year.

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