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Pharmacopeia Issues Plea to Block Shareholder s Bid to Dash Eos Acquisition

LOS ANGELES, Dec. 28 - Pharmacopeia on Friday issued a plea to shareholders asking them to ignore a formal request by a group of stockholders to prevent the company from acquiring Eos Biotechnology.


"We are confident that the proposed merger will position both Accelrys and our drug-discovery unit as viable, stand-alone businesses," Joseph Mollica, Pharmacopeia's chairman, president and CEO, said in a statement.


The appeal was in response to a statement released last week by OrbiMed, an asset-management firm that owns roughly 10 percent of Pharmacopeia's common stock, in which it threatened to vote against the deal. OrbiMed said that the proposed acquisition, designed as a $160 million all-stock deal, is "overpriced."


New York-based OrbiMed, which invests exclusively in the healthcare sector, said it believes it is currently the largest holder of Pharmacopeia stock. In a Schedule 13D filing with the SEC, the New York-based firm urged other shareholders to vote against the transaction.


Neither Pharmacopeia, OrbiMed, nor San Francisco-based Eos could be reached for comment on this penultimate trading day of the year. A shareholders' vote is set for Jan. 18.


The deal, proposed in August, would give Cranbury, NJ-based Pharmacopeia access to Eos' library of drug targets and therapeutic-development tools. The genomics firm would "also enhance Accelrys," Pharmacopeia's software business, by adding Eos' gene-expression databases to the unit's bioinformatics software products, Mollica added. 


In a letter sent on Dec. 19 to Mollica, OrbiMed said that Pharmacopeia's plan  to issue more than 10 million shares of its common stock to buy Eos is "highly  dilutive to Pharmacopeia shareholders."


"We believe this is an ill-advised transaction for Pharmacopeia and have  determined to vote all of the shares we control against the Eos acquisition," said Samuel Isaly, managing partner of OrbiMed. "We urge our fellow Pharmacopeia shareholders to vote against the transaction as well."


Pharmacopeia's offer for Eos was "overpriced," said Isaly. "Pharmacopeia is paying approximately $160 million in stock for Eos, giving Eos shareholders approximately 30 percent of the combined company," he said. "According to Dresdner Kleinwort Benson (Eos' own financial advisor), this price for Eos was above the high end of the valuation range for all four methodologies they used."


OrbiMed pointed out that ever since the deal was proposed last in August, Pharmacopeia's share price has fallen 21 percent against a 22-percent increase in the AMEX  Biotechnology Index and a 16-percent jump in the Nasdaq Biotechnology Index.


In late-afternoon trading on Friday, Pharmacopeia's shares were up slightly at $14.01. During the past 52 weeks, Pharmacopeia's shares have ranged from a high of $30 to a low of $10.95.

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