Celltech Chiroscience Acquisition Of Medeva Provides Marketing Muscle

Medeva will bring a sales force of 400 reps, including 180 reps in the U.S., to the proposed merger with Celltech Chiroscience.

The resulting company, the Celltech Group, will gain marketing capabilities as it approaches the launch of several unpartnered compounds.

Celltech has CDP 571, an anti-TNF[alpha] antibody to treat Crohn's disease, that recently completed two Phase IIb trials. The product has been granted orphan drug and fast-track status by FDA. The firm anticipates regulatory filings in the second half of 2000.

The firm's anti-TNF[alpha] antibody fragment CDP 870 for rheumatoid arthritis is in Phase II trials, with results expected by year-end. An anti-PDGF[beta] receptor antibody fragment to prevent coronary restenosis in patients who have undergone coronary angioplasty, CDP 860, will enter Phase II in early 2000.

The proposed merger, scheduled to close in January, would be the second in a year for Celltech, which completed a merger with Chiroscience in August. For Medeva, it follows on the heels of an aborted acquisition by Elan and renewed speculation of a merger (¹ (Also see "Medeva PLC" - Pink Sheet, 25 Oct, 1999.)).

While Celltech Chiroscience brought together two R&D firms with different niches that tended to outlicense products, the addition of Medeva provides marketing strength in northern Europe and the U.S.

Celltech Chiroscience has products closer to launch than its Crohn's and RA therapies, but already has marketers for them. Chirocaine, approved by FDA in August, will be launched early in 2000 by Purdue Pharma. International sales will be handled by Abbott (² (Also see "Celltech Chiroscience Strikes Chirocaine Deal With Abbott/Purdue" - Pink Sheet, 21 Jun, 1999.)).

A BLA for CMA 676 for second-line acute myeloid leukemia was submitted Oct. 29 by marketing partner Wyeth-Ayerst. Celltech also receives patent income from sales of Centocor's Remicade, Roche's Zenapax and Novartis' Simulect, all of which license a Celltech monoclonal antibody patent.

The Medeva acquisition will provide Celltech Chiroscience with five manufacturing plants in the U.S. and U.K., including the recently renovated Rochester, N.Y. and Speke, U.K. plants.

Medeva has hinted that it may have a manufacturing advantage over competitors; CDP 870 and CDP 860 are described as being produced via a "proprietary low cost fermentation technology."

The Speke plant has substantially upgraded its biotech product and vaccine production facilities following an FDA warning letter concerning the manufacture of Fluvirin. Medeva had difficulties producing the influenza vaccine for the 1999-2000 season, and is suffering sales shortfalls. The company predicts that next year the vaccine will be produced at previous levels.

The Medeva contributions to the merged company will be reflected in division names: the new company will be called Celltech Group and its two principal businesses will be Celltech Chiroscience (R&D) and Celltech Medeva (marketing, sales and manufacturing).

Medeva also brings several products to Celltech Group, including the trivalent hepatitis B vaccine Hepagene, which was filed in the EU in September 1998 and in the U.S. in February; FDA refused to file the BLA and negotiations with the agency are ongoing (³ (Also see "Medeva Hepagene" - Pink Sheet, 19 Apr, 1999.)).

Medeva's top product, methylphenidate, has recently lost market share to recent European generics. Line extensions include a modified-release form "designed to avoid the need for any school-time dosing." A Methylphenidate-MR NDA is slated for the first half of 2000. Celltech Chiroscience is developing chirally pure methylphenidate D-threo with Medeva.

Celltech Chiroscience Chairman John Jackson will retain the chairmanship of the new company and Medeva Chairman John Baker will become deputy chairman. Celltech Chiroscience CEO Peter Fellner, MD, and CFO Peter Allen will also retain their titles in the merged company, while Medeva CEO William Bogie, MD, will become a non-executive director.

Celltech Chiroscience will issue .34 shares for each share of Medeva, and will own 56% of the merged company. The offer values Medeva at [L]563 mil. ($916 mil.), a 16% premium to Medeva's closing price on Nov. 10. The combined firm will have a market capitalization of about $2.12 bil., the companies said. Celltech Chiroscience has $195.6 mil. in cash, and will assume a Medeva debt of about $155 mil.