Cytogen to buy Advanced Magnetics

Established imaging agent maker Cytogen has a deal in the works to acquire Advanced Magnetics, a research company waiting for approval of its imaging agent Combidex.

Development of MR agents will still be the bailiwick of Advanced Magnetics personnel, said Jerome Goldstein, Advanced Magnetics chairman and CEO.

In addition, the agreement gives Advanced Magnetics, based in Cambridge, MA, some control over the marketing and sale of its products.

“We won’t be dependent on the licensees of our product. There is nothing wrong with licensees, but we would like to go forward and not be totally dependent on them,” he said.

The transaction will expand New Jersey-based Cytogen’s oncology franchise and strengthen its position in the area of cancer staging and detection. Cytogen currently markets two imaging agents: ProstaScint for prostate cancer and OncoScint CR/O for colorectal and ovarian cancers. Advanced Magnetics is waiting for FDA approval of Combidex, an MR agent designed to detect lymph node metastases.

After the acquisition is approved and finalized, the company plans to use Cytogen’s oncology sales and marketing expertise for the expected launch of Combidex in the first half of 2001.

Under terms of the agreement, Cytogen will acquire all of Advanced Magnetics’ outstanding stock in a tax-free, stock-for-stock transaction. Advanced Magnetics shareholders will receive $60 million in shares of Cytogen common stock. Each outstanding share of Advanced Magnetics common stock will be converted to $8.75 worth of Cytogen common stock, subject to a collar on the price of Cytogen common stock ranging from $8.55 to $11.56. The stock-for-stock transaction includes products, technology, and cash assets. As of March 31, 2000, Advanced Magnetics had $19.5 million in cash and marketable securities.

Advanced Magnetics is halfway to FDA approval for Combidex. Last month the agency sent Advanced Magnetics a letter saying that although it found Combidex approvable for its principal indication as a lymph node imaging agent, it could not yet approve the agent for its secondary indication, imaging of the liver and spleen. While waiting for approval to market Combidex, Advanced Magnetics showed a net loss this year of $1 million (SCAN 6/7/00).

When asked if Cytogen planned to put more resources behind Combidex during the next step of the FDA’s approval process, Richard Krawiec, Cytogen’s vice president of investor relations and corporate communications, said he would rather wait until regulatory review of the acquisition is final to talk about the issue.

Cytogen has two lines of business—oncology and “proteomics,” which the company defines as the science of tracking cell protein pathways. Cytogen has three FDA-approved products on the market—OncoScint CR/OV, ProstaScint, and Quadramet, for the relief of cancer-related bone pain.

Krawiec said Cytogen’s business and research dovetails with Advanced Magnetics’ mission.