12:00 AM
Apr 30, 2001
 |  BioCentury  |  Finance

Ebb & Flow

When Artemis was launched in 1997 as a German sister company toExelixis,there was some question as to whether it made sense to have two related companies in the animal model space - other than as financing vehicles. That question has now been answered, as the companies announced last week that EXEL will absorb the 85% of Artemis it does not already own in a stock acquisition that values the remaining portion at $25.3 million and gives Artemis an overall valuation of $29.7 million. EXEL added $0.17 last week to $12.15.

While Artemis harbored hopes of becoming an independently listed European company on a pan-European exchange, CEO Peter Stadler had told BioCentury at the company's founding that a merger three years down the line might make a lot of sense (see BioCentury, Dec. 8, 1997).

"It is something that has been planned for some time," said Patrick Weber, CEO of International Biomedicine Partners, a shareholder in both companies who supported the merger. He argued the combined company will be better positioned to serve its pharma clients with a broad range of discovery services. The deal combines EXEL's comparative genomics and model system genetics platforms with Artemis' vertebrate model genetic systems.

Glen Sato, CFO and vice president of legal affairs at EXEL, said the deal was not done because Artemis was running low on cash. The German company had $6 million in cash, enough to get it well into 2002, he said.

Nevertheless, Sato acknowledged that Artemis was at a point where its technology infrastructure would require a "different level of investment, and that Exelixis' access to the markets had a big influence" on the decision to merge.

Artemis spent about $4.7 million last year, thanks in part to "favorable government support" in the form of grants, for which Sato said Artemis will remain eligible. EXEL, which will maintain Artemis' offices in Cologne and Tübingen, estimates the acquisition will increase its projected '01 spend rate by $5-$7 million from its previous $30-$35 million.

Artemis had raised $21.8 million since inception. The company's last funding round was in April 2000, when it raised $13 million through 3i; tbg; Oppenheim Investor; Commerz Beteiligungs-Gesellschaft; Technomedia Kapital-Beteiligungs-Gesellschaft; International Biomedicine Holdings; Atlas Venture; Global Life Science Holding; Oxford BioScience; and Advent International.

The merger leaves DeveloGen as the remaining independent European zebrafish play. DeveloGen has raised $38.5 million since its founding, including $35.5 million in an April financing with Dresdner Kleinwort; BdW; DVCG; Commerz Beteiligungs-Gesellschaft; TVM Techno Venture Management; Global Life Science Partners; Industrie Management Holding; Dansk Kapitalanlaeg; and tbg.

Earning their keep

Streetwatchers were surprised that Amgen (AMGN) didn't pull down the group on Friday. The company announced post-market on Thursday that it beat its EPS estimates by a penny, but reduced its 2001 EPS growth rate to "low-double digits" from "mid-teens" due to the protracted approval process for Aranesp darbepoetin alfa (see BioCentury Extra, Thursday April 26).

AMGN traded up $3.99 to $59.88 on 23.6 million shares on Friday, despite ratcheting down its '01 estimates. Scuttebutt was that several large investors had shorted the stock in front of the announcement, and were busily buying shares on Friday to cover their short positions. Other Street folk simply like AMGN's valuation now. "I like AMGN here," said OrbiMed's Sven Borho. "We are currently buyers of the stock. This is going to be the best new product story among the major biotechs."

On the week, six of the eight profitable biotech product companies beat their consensus EPS estimates. Investors also...

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