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SQUIBB AND CETUS WILL CONTINUE $75 MIL. JOINT R&D

Executive Summary

SQUIBB AND CETUS WILL CONTINUE $75 MIL. JOINT R&D program despite restructuring their June 18 equity investment agreement. "The research and development joint venture will now constitute the whole of the proposed new relationship," the companies announced Oct. 21. The R&D effort covers cardiovascular, antifungal, antiviral and anti-inflammatory drugs. "The secondary features of the former agreement-in-principle that have been eliminated from the ongoing discussions are licensing to Squibb of Cetus' existing anticancer products in Japan . . . and worldwide collaboration on Cetus' human monoclonal antibody for septic shock," the release states. "Also dropped were plans by Squibb to assume a 5% equity position in Cetus at $32 per share." Squibb's $40 mil. commitment to purchase 5% of Cetus was one of the immediate victims of the sharp market fluctuations which began Oct. 16. Squibb was uninterested in buying Cetus stock for $32 a share when the biotech company's stock dropped to half that price. Similarly, Cetus would be unlikely to let Squibb buy a larger block of the company with the $40 mil. Squibb and Cetus said they ceased discussion on cancer product licensing, the monoclonal for septic shock and the equity deal because the firms "could not reach agreement on terms." Regarding the R&D joint venture, Squibb and Cetus said discussions have "progressed to the identification of specific product programs." The companies say they are "in the process of defining the funding arrangements and other business terms which would be subject to the approval of each board of directors." In a separate, same-day press release, Cetus announced plans to take advantage of the low stock price to repurchase up to 1 mil. of its outstanding 26 mil. shares.
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