For the second time in six weeks, a promising Maryland biotechnology company will be sold to an out-of-state buyer, as Univax Biologics Inc. of Rockville said yesterday it has agreed to be acquired by North American Biologicals Inc. in a deal worth about $8.21 a share.
The buyout of Univax, which took a huge step toward profitability when its drug to treat a common AIDS complication won federal marketing approval in March, follows the announcement July 10 that Swiss drug giant Sandoz AG would acquire Genetic Therapy Inc. of Gaithersburg.
"It works out to a $150 million transaction," said Virgil Cilli, an analyst at Keane Securities in New York who follows North American Biologicals. "It didn't come cheaply."
The merged company will be based in Boca Raton, Fla., but Univax said there will be almost no reduction in the company's 130 Maryland jobs, which pay an average of $70,000 annually.
The takeover, which was designed to unite Univax's strengths in science, drug testing and relations with federal drug regulators with North American's superior financial strength and manufacturing capability, set the stage for Univax's other major announcement of the day.
Univax also announced a long-term research and development deal with one of the biotechnology industry's leaders, Chiron Corp. of Emeryville, Calif., a deal that relies on technologies Univax and North American developed separately.
Many of the drugs Univax is developing are made by injecting plasma donors with agents that will make their bodies create disease-fighting antibodies, which Univax then isolates from the rest of the plasma. To do that on a large scale, Univax needs large numbers of plasma donors and the mechanical capability to isolate the disease-fighting agents from the rest of the fluid.
North American already has 250,000 donors, has a pilot separation plant, and is developing a larger one. The company sells plasma to more than 60 drug companies, including Univax.
Chiron makes vaccines, but most of its products don't help people who already have diseases. Chiron's deal with Univax gives the Maryland company exclusive rights to use the vaccines as a base to develop drugs that can fight the same diseases once a patient becomes sick.
"It's an outlet for our technology that we had no expertise for developing internally," Chiron spokesman Larry Kurtz said. "You need a donor network, you need [plasma] collection centers, you need a manufacturing expertise and you need clinical and regulatory expertise. Their merged organization does those very well."
In exchange for the rights to develop Chiron vaccines, the merged Univax/North American will pay Chiron royalties on product sales and "milestone" payments based on progress in research before any products are on the market.
The price North American agreed to pay for 7-year-old Univax, which had only $2.8 million in sales last year and has not yet turned a profit, highlights the explosive potential of an industry Maryland officials have worked hard to nurture.
But the fact that the sale happened at all highlights how hard it is for entrepreneurs to raise the hundreds of millions of dollars they need to develop pioneering drugs, learn how to manufacture them and get them approved by federal regulators before their companies can deliver big profits and spin off hundreds or thousands of jobs.
Shekhar Basu, an analyst who follows Univax for the New York securities firm Punk, Ziegel, & Knoell, estimated that Univax would have had to spend $50 million to $75 million to build a plasma donor base and manufacturing capability.
Prospects for raising that money were uncertain, Mr. Basu said, in part because Univax had a setback in May when it disclosed that a key new drug to prevent staph infections worked poorly in clinical trials. That news notably cooled off Wall Street, where one analyst had projected that Univax shares would rise as high as $19 by the spring of 1996.
The research failure led Univax to lay off about 40 people at its Rockville headquarters, despite the FDA approval of the AIDS-complication drug WinRho SD, which is expected to generate up to $100 million in annual sales by 1999. The layoffs were designed to assure that the company had enough money to survive until WinRho took off.
"Without this transaction, it would have taken Univax a long time to grow," Mr. Basu said. "What Univax gets is access to capital, it becomes profitable within a year, and gets manufacturing and plasma donor facilities it would have taken a long time to get."
It also gets about $150 million of stock of North American Biologicals. Univax shareholders will get .79 of a share of North American for each Univax share they hold. North American Biologicals closed at $10.375 yesterday. The deal requires approval from both companies' shareholders and North American's lender.