Hyseq, Variagenics to merge

HYSQ, which is developing therapeutics based on rarely expressed genes, will merge with molecular diagnostics play VGNX in a $55.9 million stock deal. Using HYSQ's Friday close at $1.35, the deal values VGNX at $2.22 per share, a 131% premium to the company's Friday close at $0.96. VGNX will own 64% of the combined company, but HYSQ Chairman George Rathmann and President and CEO Ted Love will retain their respective titles. The merged entity will focus on HYSQ's alfimeprase fibrolase-derived thrombolytic to treat peripheral arterial occlusions and other cardiovascular conditions and VGNX's cancer diagnostics program.

Love told BioCentury that "cash was certainly a very important part of the deal." As of Sept. 30, HYSQ had $4.3 million in cash, while VGNX had $55.7 million. With the deal, the merged company expects to be able to fund operations through 2004. Love also noted that VGNX brings experienced people in cardiovascular and cancer areas. The combined company will have 110-120 employees. HYSQ now has about 115 people and VGNX has about 80 people. Love declined to comment on the areas within the combined company that will be reduced or eliminated. ...