ABBOTT WILL ACQUIRE DAMON BIOTECH FOR $9.4 MIL
ABBOTT WILL ACQUIRE DAMON BIOTECH FOR $9.4 MIL. under a letter of intent signed by the companies Oct. 17. The acquisition will give Abbott access to Damon Biotech's cell growth and enhancement technologies for its pharmaceutical, diagnostic, chemical and agricultural products. Abbott has an existing agreement with Damon for use of its technologies in the development of urokinase clot-dissolving products ("The Pink Sheet" Feb. 20, T&G-2). Damon Biotech's leading technologies are the Encapcel method of encapsulating cells to grow high density cultures and a "cellular enhancement" technology involving the genetic engineering of myeloma cells. The firm has applied the Encapcel technology to monoclonal antibodies, which the firm produces under contract for the National Cancer Institute and several companies, including Hoffmann-LaRoche, DuPont, NeoRx and Cytogen. One of the "synergies" of the acquisition could be the production of monoclonal antibodies for Abbott's diagnostic products, many of which are based on monoclonals. Abbott plans to begin clinical trials with a urokinase product developed by Damon Biotech in late winter or early spring, Abbott said. The company is seeking a new myocardial infarction prevention indication for the product. Abbokinase (urokinase) is currently approved for treating pulmonary embolism and coronary artery thrombosis. Under the letter of intent, Abbott will acquire all outstanding shares of Damon Biotech for a cash price of approximately $1.02 per share, according to an Oct. 17 release from Damon Biotech. The acquisition is expected to be completed by early 1990. Abbott has said it will not relocate the biotech company, which has its production and research facilities in Needham Heights, Mass. The per-share price represents a 64% premium on Damon Biotech's recent stock price. The firm has been trading in the 62 cents range and closed at 50 cents on Oct. 17. The stock price has been falling as the firm has continued to show operating losses in the past year and three quarters. In January 1988, Damon Biotech's stock was trading in the $2.50 range. The firm was hurt in 1988 and earlier this year by the loss of two major research and development contracts for tissue plasminogen activator from Smith-Kline Beckman and Yamanouchi Pharmaceutical of Japan. Company sales after the first nine months of this year were down 41% to $3.5 mil. and the firm had a net loss of $4.1 mil. In conjunction with the Abbott agreement, Damon Biotech is cutting some remaining ties with its former parent, Damon Corp. The biotech firm has exchanged the $3.17 mil. note it holds from Damon Corp., for all 1.4 mil. shares held by Damon. In addition, the Damon designees on the Damon Biotech board have resigned. Damon Corp. announced its intention to sell its 61% interest in Damon Biotech in early 1989.
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