Colorado biotechnology company Synergen Inc., once touted as "the next Amgen," will instead be swallowed up by Amgen Inc. in a $239.6-million deal announced Friday.
Thousand Oaks-based Amgen said it will pay $9.25 a share for Synergen, one of several high-profile biotech firms battered this year after once-promising drugs flopped in lab tests. The research disappointments have added to the financial woes of these companies--forcing them to search for corporate partners--and has weakened the overall investment climate in biotech.
Synergen's fortunes tumbled in July after the clinical failure of its drug Antril, which had been promoted as a potential treatment for sepsis, a deadly blood disease that claims 100,000 lives a year. Since then, Synergen stock has taken a pounding, and the firm has reported a $47-million quarterly loss and laid off 375 workers, or 60% of its work force.
Analysts said the deal gives Amgen, the nation's largest biotechnology firm, access to several promising drugs and well-regarded research scientists at Synergen. The Boulder, Colo. firm is developing treatments for several diseases that have stymied researchers for years, including rheumatoid arthritis, Parkinson's disease and amyotrophic lateral sclerosis, known as Lou Gehrig's disease.
"Amgen got a very attractive price and there's a strategic fit on the programs they are both working on," said Linda L. Miller, a PaineWebber analyst.
Synergen's stock, which had traded as high as $75 in 1992, fell sharply in 1993 after Antril failed a key clinical test, and declined further in April after another research disappointment for Antril. On Friday, the stock jumped 68%, or $3.66, to $9.03 in Nasdaq trading.
Amgen's share price slipped 19 cents to $56.875 on Nasdaq on Friday.
Gregory Abbott, Synergen's president and chief executive, said the company began seeking a partner after the Antril failure. "While we have lots of cash by biotech standards (about $100 million)," he said, "the resources need to develop products would be greater than the funding we had."
Amgen officials also stressed the "unique strategic fit" of the companies. Both firms are developing genetically engineered treatments for neurobiology and inflammatory diseases.
"This acquisition will allow us to get to a critical mass in these areas two years earlier," said Gordon M. Binder, Amgen's chairman and chief executive.
Amgen's growth--the company had 1993 revenue of $1.4 billion--is tied largely to the success of two blockbuster products, Epogen and Neupogen. Epogen is used as a treatment in kidney dialysis and to treat anemia in AIDS patients. Neupogen is used to stimulate white blood cell production in cancer patients undergoing chemotherapy.
Amgen's stock has been rising in recent months, partly on speculation that the company might be a takeover target, but also on prospects for revenue growth from new uses for Epogen and Neupogen. But there is continuing concern among investors about the lack of any significant new products on the near horizon.
Miller, the PaineWebber analyst, said the Synergen deal does not appear to give Amgen such a major product in the near term.
"On the other hand . . . there are five products here (with Synergen) and they didn't invest a lot in them. There is a big upside here if even one of them works."
Amgen Inc. at a Glance
* Headquarters: Thousand Oaks
* Chief executive: Gordon M. Binder
* Employees: 3,300
* Major products: Epogen, Neupogen
* Post-merger acquisitions: Anti-inflammatory drugs such as Interleukin-1 Receptor Antagonist and Tumor Necrosis Factor Binding Protein; other drugs include Ciliary Neurotrophic Factor (being tested to combat Lou Gehrig's disease) and Glial Derived Neurotrophic Factor (being developed to combat Parkinson's disease).
* 1993 revenue: $1.4 billion
* 1993 profit: $383.3 million
* Earnings per share: $2.66
* Friday stock price: $56.88, down 19 cents
Sources: Bloomberg Business News; Standard & Poor's Corp. Researched by ADAM S. BAUMAN /Los Angeles Times
Synergen traded as high as $75 a share in January, 1992, but crashed a year later after a key drug, Antril, flunked a clinical trial. The stock has declined further since the company was put up for sale in July after Antril failed another test. Monthly closes, except latest:
Friday: $9.03, up $3.66