Chiron to Buy Viagene Stake in Deal Valued at $95 Million
In another example of the consolidation sweeping the biotechnology industry, Chiron Corp. agreed to acquire the remaining 83% of stock in gene-therapy pioneer Viagene Inc. in a deal valued at about $95 million.
Chiron, one of the country’s largest maker of vaccines and drugs, and Viagene already collaborate on several products. Chiron, based in Emeryville, Calif., invested $20 million in San Diego-based Viagene in late 1993 to acquire a 17% stake.
Subject to shareholder approval, the deal would give Viagene shareholders the choice of receiving about $9 cash or 0.155 share of Chiron stock for each of their shares, although Chiron said it would only pay 40% of the total deal cost in cash and the remainder in stock.
The purchase price amounts to a 50% premium over Viagene’s Friday close of $5.25 per share in trading. On Monday, Viagene shares soared $3.19 to $8.56, while Chiron edged up 25 cents to $56.75, both on the Nasdaq.
Facing lengthy clinical trials, depressed capital markets and dwindling cash, many small biotechnology companies are under pressure to forge alliances with large drug companies. Founded in 1987, Viagene has no product sales, accumulated losses of $32 million and enough cash to last two more years.
Chiron covets the gene therapy technology that is the basis of Viagene’s therapeutic drug for HIV infection now in clinical trials, said Bear Stearns & Co. analyst David Molowa. Viagene’s is a “core enabling technology” that facilitates the introduction of genes into the human body, and Chiron may try to incorporate it into several new drugs in development, he said.
No layoffs are anticipated among Viagene’s 162 employees, and the operation will remain in San Diego, Chief Financial Officer Jeff Works said Monday.
