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MEDIMMUNE TO ACQUIRE MELVILLE BLOOD PRODUCTS BUSINESS FOR UP TO $45 MIL.

Executive Summary

MEDIMMUNE TO ACQUIRE MELVILLE BLOOD PRODUCTS BUSINESS FOR UP TO $45 MIL. under a letter-of-intent stage deal announced Sept. 14. The agreement calls for Gaithersburg, Md.-based MedImmune to issue $40 mil. of new stock to acquire Melville Biologics from the New York Blood Center. MedImmune would pay up to $4 mil. in cash to reimburse the center for "anticipated investments in working capital and specific capital improvements which may be completed prior to closing of the transaction." Medlmmune would also pay the center "a $1 mil. contingent milestone payment and royalties on sales of certain products employing technology licensed from the blood center." Melville, based in Melville, Long Island, currently markets finished blood products including albumin and MelATE brand Factor VII. Melville also has had a PLA pending since February for MelPLAS, a virus-inactivated plasma for transfusion, and expects to file a PLA for MelGAM, a virus-inactivated intravenous immune globulin, in the fourth quarter. Melville is developing "a number of new products...including a fibrin glue preparation for surgical and wound healing applications." As part of the agreement, MedImmune would receive "a 10-year right of first offer to license and develop any technology coming out of the New York Blood Center's research programs." The blood center's 130-person Lindsley F. Kimball Research Institute explores "diverse blood-related disciplines" including AIDS, leukemia, malaria and hepatitis, MedImmune said. The institute's core technology is a "solvent detergent viral inactivation" technology, which it licenses to "dozens" of firms worldwide, NYBC said. The institute has a budget of $16 mil. from a combination of licensing agreements and federal grants. The NYBC is a not-for-profit corporation that describes itself as "the largest independent blood collection organization in the U.S." NYBC "provides blood and blood products for the 18 mil. people in the New York/New Jersey metropolitan area." The acquisition would give MedImmune a total of seven products either on the market or "at PLA stage." MedImmune currently markets CytoGAM immune globulin and has a PLA pending for the respiratory syncytial virus agent Respivir. The firm also has copromotion rights to Lederle's pending antibiotic Zosyn ("The Pink Sheet" July 19, T&G-11). "No fundamental changes in either size or strategy of our sales and marketing programs are anticipated" as a result of the acquisition, MedImmune said. Melville has about half-a-dozen sales reps; MedImmune has 15. The acquisition will help MedImmune consolidate its manufacturing operations. MedImmune had signed up Melville as a secondary manufacturing site for Respivir and "expects to produce a majority of MedImmune's worldwide supply at this facility by 1996." In addition, Melville markets "intermediates used in the production of immune globulins, such as CytoGam and Respivir," MedImmune noted. Melville's sales for the 11 months ended March 31 were $31 mil., MedImmune said. Melville lost $6 mil. in that period. "Melville is a division of the New York Blood Center and as such its historical operating results may not be representative of those either as an independent company or as a part of MedImmune," the company noted. Melville has approximately 150 employees. The deal is expected to close by the end of the year. At current stock market prices, MedIm mune would issue about 2 mil. shares to NYBC for the acquisition, which would leave the blood center with approximately a 10% ownership interest in MedImmune.
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