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Human Genome Sciences Buys Principia Pharmaceutical for $120 Million

NEW YORK, Sept. 11 – In a move that brings it a step closer to its goal of becoming a global pharmaceutical company, gene-based drug discovery company Human Genome Sciences (Nasdaq: HGSI) said Monday it had acquired privately held Principia Pharmaceutical for about $120 million in stock.

The acquisition gives HGS access to Norristown, Pa.-based Principia’s technology that may foster the use of human proteins as drugs. The technology, licensed by the company from Aventis (NYSE: AVE), fuses the DNA for therapeutic protein with the DNA of human albumin, allowing it to remain in the bloodstream for days.

Proteins are notoriously unstable molecules and need to be administered through injection, which makes them difficult to use as drugs. HGS, with several human protein drugs in clinical trials, is likely to benefit from a technology that prolongs the half-life of these drugs and thus reduces the frequency of injection.

“Principia technology should be instrumental in helping HGS to develop and commercialize its own protein products that are safe, efficacious, and more convenient to patients,” said Arthur Mandell, senior vice president of corporate and business development at HGS.

Under the terms of the agreement, approximately $120 million of HGS common stock, based on a 20-day average price, was exchanged for all outstanding shares and options of Principia. The acquisition will be accounted for using the purchase method of accounting, and HGS expect to incur a significant one-time charge for purchased in-process research and development expenses.

Principia's founder and president, Christopher Prior, will continue to lead the now wholly owned subsidiary of HGS.

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