Alliance Pharmaceutical Corp. said it has bought financially troubled Molecular Biosystems Inc. for about $10.4 million in stock to gain access to its contrast imaging agent, Optison.
On Oct. 12, San Diego-based Alliance agreed to buy its local rival in the contrast imaging market Molecular Biosystems in exchange for 700,000 Alliance shares , a number that could be lowered under certain circumstances.
Gwen Rosenberg, Alliance’s spokeswoman, said the two companies have been in merger discussions over the past year.
The resolution of patent issues between Molecular Biosystems’ marketing partners sealed the deal, she said.
Alliance said Aug. 21 the Food and Drug Administration found its contrast imaging agent Imavist (formerly Imagent) approvable, but asked the firm to fulfill certain manufacturing requirements.
Molecular Biosystems’ contrast agent Optison won FDA approval in January 1998, but never gained significant market share.
She added Molecular Biosystems has been looking for a buyer some time.
Molecular Biosystems’ San Diego office, which was down to three employees including the CEO, will close, Rosenberg predicted.
Bobba Venkatadri, Molecular Biosystems’ president and CEO, will offer consulting services to Alliance for a while, she said.
The other two employees, a cardiologist and a marketing director, will join Alliance, she said.
James McCamant, editor of the Berkeley-based Medical Technology Stock Letter, said the deal makes sense for Alliance.
“This is a good move. It’s a not a lot of money (Alliance is paying),” McCamant said.
Duane J. Roth, Alliance’s chairman and CEO called the acquisition an investment in the company’s future.
“We believe that by having both Imavist and Optison, Alliance will be well-positioned to take advantage of the expected future market for these agents,” Roth said.
The acquisition still needs to be approved by Molecular Biosystems’ shareholders. Rosenberg expects the buyout will be completed by January.
Experts estimated the contrast imaging market to be around $12 million.
Roth, however, is optimistic Molecular Biosystems’ two marketing partners , St. Louis-based Mallinckrodt Inc. and Nycomed Amersham plc. , will help boost Optison sales in the United States and Europe.
Optison is also being tested by Japanese-based Chugai Pharmaceutical Co. in a late-stage clinical trial for approval in Japan, South Korea and Taiwan. If Optison is approved in these countries, Chugai will pay Molecular Biosystems about 25 percent in royalties on Optison sales in its territory.
McCamant said while he remains critical of the contrast imaging market, Alliance also has other products in the pipeline to fall back on.
That includes an artificial blood substitute, Oxygent, for which Alliance will seek European and United States regulatory approval in 2001.
Another product, LiquiVent, will be tested in late-stage clinical trials with cardiac surgery patients suffering from acute lung injury and acute respiratory distress syndrome, Alliance said.
