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Vertex Pharmaceuticals to Acquire Aurora Biosciences for $592 Million in Stock

NEW YORK, April 30 - Vertex Pharmaceuticals has agreed to acquire Aurora Biosciences in a stock-for-stock deal worth $592 million, the companies said Monday.

The deal is designed to help Vertex expand its drug discovery program into additional gene families, notably g-protein coupled receptors (GPCRs) and ion channels, two areas that Aurora has targeted. Vertex also expects Aurora's high throughput screening capabilities to help the company identify drug targets in the the kinase gene family as part of a research collaboration with Novartis.

Under the terms of the deal, Vertex will issue new stock and convert Aurora's stock into its own at a ratio of 1 to 0.62 a share. At this ratio, Vertex will essentially purchase Aurora stock at a value of $24.34 per share, representing a 44 percent premium to Aurora's closing price of $16.85 on Friday.

Following the acquisition, Aurora will operate as a fully owned subsidiary of Vertex, with current Aurora CEO Stuart Collinson joining Vertex's board of directors. Aurora's vice president of business development, Harry Stylli, will assume the position of president of the subsidiary. The two companies' shareholders must still approve the deal, along with regulators, but the companies expect the deal to close in the third quarter of 2001.

Joshua Boger, CEO of Vertex, said in a conference call to discuss the deal that the deal reflects his company's objective of acquiring a complex technology platform for cell-based assays and high-throughput screening and to expand into additional gene families to discover new drug targets.

Boger said that the two companies initially discussed forming a joint venture, but that "as we came to know Aurora, we saw the likelihood of value enhancement across the entire organization in every program we were doing."

"We could have done a strategic partnership but it would have been inefficient and costly to Vertex shareholders," he said.

From Aurora' perspective, the deal helps fulfill Aurora's goal to build its internal drug discovery program, and "capture a greater portion of the downstream revenue of our technology platform," said Collinson. To date, most of Aurora's revenue has come from partnerships with larger pharmaceutical companies.

"Most importantly, Vertex has accomplished success by being a master integrator of technologies," added Collinson.

The complementarity of the two companies programs also extends to PanVera, a recombinant protein manufacturer recently acquired by Aurora, Boger said. In addition to its protein business, PanVera also sells fluorescence polarization-based high-throughput screening assays. "As we've come to know the organization, we've begun to appreciate [PanVera's] capabilities," said Boger.

Vertex's management also said that the deal would not significantly affect the company's balance sheet projections for 2001. The company announced early last week that net loss for the year is expected to be between $60 million and $65 million.