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Executive Summary

ALKERMES' ACQUISITION OF ENZYTECH WILL ADD DRUG DELIVERY RESEARCH to Alkermes' core neuroscience research programs. Enzytech's "drug delivery technologies provide the basis for the development of Alkermes' own therapeutic products in its core areas of focus, such as neuroscience, and for significant collaboration with other companies outside of those areas," the company said in a Nov. 23 registration statement filed with the Securities and Exchange Commission. Alkermes will issue 2.9 mil. shares in exchange for all shares of privately-held Enzytech. At current prices, the Alkermes shares would be worth about $30 mil. The merger must be approved by shareholders of both companies at meetings expected to occur in late January or early February. The acquisition agreement, announced Nov. 20, will combine two Cambridge, Mass. firms that share the same building. Both firms are affiliated with Centocor as well. Centocor Executive Committee Chairman Michael Wall is chairman of Alkermes and Centocor founder Hubert Schoemaker serves as a director of Alkermes. Centocor owns 11.4% of Enzytech as part of an August 1991 collaboration ("The Pink Sheet" Aug. 19, 1991, In Brief). Enzytech, founded in 1987, is developing two delivery systems for the administration of biotech products. ProLease is a patented sustained-release injectable system that uses biocompatible and biodegradable microspheres to decrease the frequency of injections of peptides. OraLease is an oral microencapsulation system using the corn protein zein to deliver large peptides not otherwise orally available. Phase I trials of Enzytech's first product, a ProLease formulation of adrenocorticotropic hormone (ACTH), began in October, the registration document states. ACTH is used to treat acute episodes of multiple sclerosis in once- or twice-daily injections. Enzytech's formulation allows for once-weekly administration. The firm expects to begin clinical trials with two other ProLease formulations and one OraLease formulation during 1993, the registration statement says. The prospectus does not disclose which products are expected to begin trials next year. The prospectus, however, notes that Enzytech has ProLease versions of human growth hormone and erythropoietin as well as an OraLease version of the bed-wetting treatment desmopressin acetate (DDAVP) in "late preclinical" research. In addition to its agreement with Centocor, Enzytech has deals with two undisclosed corporations to evaluate the suitability of reformulating their products. The merger agreement stipulates that Enzytech Chairman Mark Skaletsky will join Alkermes as VP and director, while Enzytech CEO Russell Hays will serve as president of Alkermes. Richard Pops, Alkermes president and CEO, will retain the title of CEO after the merger. Enzytech has 46 employees and about $4 mil. in cash. Alkermes went public in 1991 and has raised over $100 mil. via two public offerings and a limited partnership in the past two years ("The Pink Sheet" April 20, T&G-5). Alkermes' lead product, the RMP-7 blood-brain barrier permeabilizer, "has completed initial Phase I clinical studies in 78 healthy volunteers," the prospectus states. Phase I/II trials of RMP-7 alone and in conjunction with therapeutic agents are expected to begin in 1993 for AIDS-related CNS infections, brain tumors and infectious diseases, the prospectus states. As a result of the merger, "Alkermes will emerge a leader in the formulation and delivery of complex biological molecules," the prospectus declares. The addition of Enzytech's ACTH formulation will give the company "two proprietary products in clinical trials for central nervous system indications." The "broadened portfolio of product candidates and technologies will provide additional opportunities for revenue-generating collaborative agreements as well as product introduction in the next several years," Alkermes said. The Enzytech acquisition is Alkermes' second investment in another start-up company. In January, the firm committed to pay up to $14.5 mil. to Cortex as part of a collaboration to develop calpain inhibitors ("The Pink Sheet" Jan. 13, T&G-4).

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