Pharmacopeia Seeks to Acquire Eos Biotechnology in $196M Stock Deal

NEW YORK, Aug. 22 - Pharmacopeia has made a pitch to acquire privately held Eos Biotechnology in a stock-for-stock deal valued at $196 million, the companies said on Wednesday.

The merger, which still faces regulatory approval, would join Pharmacia's small-molecule drug design expertise with Eos' capabilities in developing antibodies for use as therapeutics. In July, Pharmacopeia executives said they were looking for ways to expand their access to drug targets independently of their pharmaceutical collaborators.

To acquire South San Francisco, Calif.-based Eos, Pharmacopeia will issue about 10 million shares of its common stock and assume options and warrants to acquire an additional 600,000 shares of its common stock. Based on Pharmacopeia's closing share price of $18.51 on the Nasdaq on Tuesday, the deal values Eos at about $196 million, including the company's cash holdings of $44 million.

Eos has developed a drug-discovery platform that includes databases of gene-expression data, bioinformatics tools, and a custom-built Affymetrix DNA microarray that the firm says contains more than 90 percent of all human genes. The company says it has also identified 90 proteins with potential as targets for antibodies. Currently Eos has one antibody drug candidate--a treatment for angiogenesis--in preclinical trials. 

In a conference call to discuss the deal, Pharmacopeia CEO Joseph Mollica said that Eos' gene-expression databases and bioinformatics tools could add to the offerings of Pharmacopeia's Accelrys software business. In July, Princeton, NJ-based Pharmacopeia said it was considering splitting Accelrys from the drug-discovery business, and Mollica said on Wednesday that the company is still considering options for increasing the company's valuation in the stock market.

The chief executive added that the combined company would aim to initiate phase I clinical trials for one drug candidate during 2002, and bring several additional candidates to clinical trials during the next two years. By 2005, Mollica said, Pharmacopeia should have a candidate drug in phase II clinical trials. At that point, the company would look to partner with a pharmaceutical company to finish testing the drug, he said.  

Eos currently has drug discovery collaborations with Aventis-Pasteur and Biogen to identify and validate targets for therapeutic antibodies and vaccine therapies, respectively.

Eos CEO David Martin will become president of the combined drug-discovery company.