Synbiotics Corp. of RB Seeks to Retain Its
Position on the Nasdaq
One analyst said San Diego-based Aurora Biosciences Corp.’s shareholders are likely to be disappointed over the firm’s merger agreement with a Cambridge, Mass.-based drug maker.
Aurora Biosciences, which makes technology to speed up the drug-discovery process, announced April 30 it signed a stock deal worth about $592 million to be acquired by Cambridge-based Vertex Pharmaceuticals Inc. Under the agreement, Vertex will exchange 0.62 shares for each of Aurora’s shares standing. Aurora stock jumped more than 37 percent following the announcement.
Still, Matt Berry, associate analyst for the Medical Technology Stock Letter in Berkeley, predicted Aurora would have done well on its own.
“It seems a little bit on the cheap side,” Berry said about the stock deal.
Aurora has great upside potential.
The profitable biotech has proven technology that aids companies in identifying drug targets much more quickly, he said.
For the fiscal year ended Dec. 31, Aurora reported all-time high revenues of $63.8 million; a net income of $5.7 million; and about $100 million in net cash.
Aurora should have seen long-term revenue and earnings growth, Berry predicted.
“In three to five years from now, we would have seen the stock higher than $24 a share.”
On April 30, shares of Aurora jumped 37.7 percent, closing at $23.20. Shares of Vertex slipped 69 cents to $38.56.
Aurora’s stock gain marks a significant premium to its closing price of $16.85 April 27, Berry said.
He hopes the deal will spawn investors’ interest in other second-tier biotech firms, such as Aurora, given the weak performance of biotech stocks in recent months.
March was the worst month for biotech stocks since 1993, according to Red Herring magazine, a business publication.
Vertex chairman and CEO Joshua Boger said the deal won’t have material impact on 2001 financial results. But he said Aurora’s technology will add value in early-stage research.
“Aurora has developed a compelling suite of technologies that has the potential to accelerate target selection, lead generation and optimization, drug candidate selection and establishment of clinical proof-of-concept across multiple gene families,” Boger said. Vertex has an approved HIV protease inhibitor on the market and develops drug candidates for cancer, autoimmune and neurological disorders.
After the merger is completed, Aurora will operate under its own name as a wholly owned subsidiary of Vertex.
Harry Stylli, Aurora’s senior vice president of commercial development, will be president of the Aurora unit.
Stuart J.M. Collinson, Aurora’s chairman, CEO and president, will join Vertex’s board when the merger closes.
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Nasdaq Delisting:
Rancho Bernardo-based Synbiotics Corp. said April 26 it faces delisting from the Nasdaq for failing to meet the required minimum bid price of $1 a share.
Synbiotics, which develops animal health products, has scheduled an oral hearing for May 24 to review its status, the company said in a statement.
Shares of Synbiotics closed at 44 cents, up 7.32 percent, on May 1.
Under Nasdaq rules, a company is typically sent a delisting notification if the stock price falls below $1 a share for 30 days.
Companies typically have 90 days to move the price back above the floor for 10 consecutive days, provided the firm can appeal.
If its request to remain listed on the Nasdaq is denied, Synbiotics expects to move its shares to the OTC bulletin board, according to published reports.
The firm announced an $18.5 million loss for the year, including a $5.7 million write-off associated with the sale of its Internet unit.
Please send news about the biotech industry to mwebb@sdbj.com.
