SAN FRANCISCO (MarketWatch) — Shares of Eyetech Pharmaceuticals soared Monday after the company agreed to be acquired by OSI Pharmaceuticals for $935 million in cash and stock.
Wall Street was decidedly split over the deal, sending shares of Eyetech
higher 30% to close at $18.13, while OSI
plunged 22% to $31.92.
The deal values Eyetech shares at $20 each, or roughly a 43% premium over Friday’s closing price of $13.99.
The agreement, announced on Sunday, calls for $15 per share, or 75% of the purchase price, to be paid in cash and the remainder in OSI’s common stock at a ratio of 0.12275 of a share for each Eyetech share.
New York City-based Eyetech specializes in developing ophthalmology medications. Eyetech markets its lead drug Macugen, a treatment of wet age-related macular degeneration that’s a leading cause of blindness in the elderly, with Pfizer
Macugen is also being tested to treat other causes of vision loss, including those associated with diabetes.
Many Eyetech watchers believe Macugen, which was enthusiastically received by the market when it was approved late last year, may face formidable competition from a rival drug, called Lucentis, being developed by Genentech
Positive data on Lucentis have created considerable volatility in Eyetech’s shares in recent months.
For the second quarter ended June 30, Eyetech posted a loss of $7.1 million, or 16 cents a share, on revenue of $57.1 million. Macugen contributed gross product revenue of $49.7 million.
has focused on oncology and diabetes drug candidates. Its lung cancer drug Tarceva, co-marketed with Genentech, received regulatory approval in late 2004.
OSI also markets the oncology drugs Novantrone and Gelclair, and the company’s developing therapies for diabetes as well.
Based in Melville, N.Y., OSI posted a loss of $24.5 million, or 48 cents a share, on revenue of $34.6 million for the June quarter.
In a joint statement, the companies said they expect the deal to close by the end of the year.
OSI projects combined revenues of $600 million in 2006 and a compound annual revenue growth rate in the mid-teens over the five-year period beginning in 2007.
The combined company will focus on oncology, eye diseases and diabetes, OSI said.
First Albany Capital reiterated a neutral rating on Eyetech following news of the deal, calling it “a merger of weaknesses.”
“OSIP currently has no expertise in eye disease, and we see minimal synergy between Macugen and the company’s existing product portfolio,” the firm told clients. “In addition, OSIP will now compete with its oncology partner Genentech in the macular degeneration market in the U.S.”
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