BIO-TECHNOLOGY GENERAL ACQUIRING GYNEX IN $48 MIL. STOCK SWAP

BIO-TECHNOLOGY GENERAL ACQUIRING GYNEX IN $48 MIL. STOCK SWAP that will give BTG one currently marketed product (Delatestryl injectable testosterone) and another hormonal drug (Oxandrin) which is now available under a Treatment IND. Announced March 10, the proposed merger will combine two companies whose lead products are directed at treating pediatric growth disorders and HIV- wasting syndrome and HIV-associated muscle weakness. Gynex Pharmaceuticals expects to complete a Phase III trial by the end of March evaluating its oral testosterone analog Oxandrin (oxandrolone) for treatment of constitutional delay of growth and puberty (CDGP) in boys and file for FDA approval in early summer. Oxandrin is also in Phase III for girls with Turner syndrome, a genetic disorder that causes short statute, non-functioning ovaries and failure to develop secondary sexual characteristics. More than 50 patients are currently using Oxandrin under Treatment IND programs for both indications. Gynex provides the product on a cost-recovery basis. The firm charges less than $2,000 for a year's supply of the tablets. Gynex acquired oxandrolone from Searle in 1990. Another potential application for Oxandrin is as a treatment for alcoholic hepatitis. Clinical studies conducted by the Department of Veterans Affairs indicate that the drug reduced mortality in certain hepatitis patients by 50%, Gynex said, adding that it will "soon" seek FDA approval for the indication. BTG expects FDA approval to market its injectable human growth hormone, Biotropin, soon after Eli Lilly's orphan drug exclusivity ends in March 1994. The product will be introduced in the U.K. within the next several months, followed by launches in Germany, France, Spain, Italy and the Netherlands. Gynex previously has noted that studies suggest a combination of Oxandrin and hGH produces greater increases in growth rate than either product used alone. The combined companies will continue to pursue an HIV- wasting syndrome indication for both products. The proposed stock swap is valued at $48 mil., based on an exchange of .61 shares of BTG stock for each of Gynex' 13.1 mil. outstanding shares and a March 9 closing price of $6 per BTG share. The ratio is fixed, regardless of future stock fluctuations for either company. BTG will have around 34 mil. shares outstanding after the transaction, with Gynex shareholders holding approximately a 25% stake. The two firms expect to finalize the deal by early summer. The combined company will be called Bio-Technology General. Gynex' Vernon Hills, Ill.-based operations will be folded into BTG's eight-person headquarters, which is being relocated from New York City to Metro Park, N.J. The balance of BTG's 140 employees work at an R&D and manufacturing facility in Rehovot, Israel. Gynex Chairman and CEO Stephen Simes will become a senior VP and director of BTG; positions for Gynex' six other employees have not been determined. Gynex, which went public in December 1986, has approximately $3 mil. in cash. BTG believes that its $20 mil. in cash will fund operations at least through 1994.