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Cambridge Antibody Technology to Swallow Oxford GlycoSciences in Planned Merger

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Oxford GlycoSciences and Cambridge Antibody Technology are planning to merge, the two companies said last week.

The merger, combining CAT’s antibody expertise and OGS’ proteomics technology, will result in a company with a strong emphasis on product development: It will have two approved products — one from each company — seven products in clinical trials, and seven preclinical products.

Moreover, the company will have a comfortable financial cushion: As of Sept. 30, CAT had net cash and liquid resources of approximately £129.8 million ($210.7 million), at an pre-tax loss of £31.8 million ($51.5 million) for the year. As of Dec. 30, OGS had a cash balance of £136.4 million ($221 million). Assuming CAT’s burn rate has remained stable, the companies would have a combined cash asset value of approximately £258 million, or $419 million, at present.

In the merger, CAT will subsume OGS. The new company, to be called Cambridge Antibody Technology, plans a cost-cutting “portfolio review” that will “focus R&D expenditure on the highest quality projects,” according to a joint statement. This review will be co-chaired by CAT’s chief medical officer David Glover and OGS’ chief scientific officer Raj Parekh. The combined company expects to save approximately £10 million ($16 million) in expenses in its first financial year through eliminating “duplicated activities” in corporate overhead, R&D, and real estate. At press time, it was unclear how this would affect OGS’ proteomics business unit. However, the two companies stated that “management intends to continue OGS’ business strategy in respect to proteomics.” The results of the review will be announced in November.

Under the deal, OGS stockholders will receive 0.362 shares of CAT for each share of OGS owned. CAT shareholders will own 64.3 per cent of the new company, and OGS shareholders will own the remainder.

Based on CAT closing price of 540 pence ($8.70) on Jan. 22, the day before the merger was announced, each OGS share is valued at 195.5 pence ($3.17), a premium of 28.2 percent over yesterday’s closing price.

The merger will leave CAT’s senior management in charge, including chief executive officer Peter Chambré, chief financial officer John Aston, chief medical officer David Glover, and chair Peter Garland.

OGS chief executive officer David Ebsworth will be asked to join CAT’s board as an executive director “to assist in the integration process,” according to a statement from the two companies. He plans to remain on the company board as a non-executive director thereafter. OGS chief scientific officer Raj Parekh will be asked to join the CAT board as an executive director during the transition and review. He plans to remain on the board as a non-executive director subsequent to that. OGS chief medical officer Chris Moyses and chief financial officer Denis Mulhall will be asked to join CAT’s executive committee. James Hill, currently an OGS non-executive board member, will be asked to join CAT’s board as a non-executive director.

The merger is expected to happen in March 2003, subject to approval by shareholders of both companies.

— KM/JK

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