Updated from 12:24 p.m. EDT
announced Monday that it would acquire
for stock valued at more than $900 million, blending the two biotechnology companies' efforts to develop therapies for treating or preventing autoimmune diseases and cancer.
After the close of the deal, expected in December, the combined company would have a portfolio that includes two key late-stage clinical products: Bexxar, Coulter's prospective therapy for use in treating non-Hodgkin's lymphoma, and Melacine, Corixa's melanoma vaccine.
Corixa certainly has its eyes on Bexxar, which has "potential for significant near-term revenue," Steven Gillis, chairman and chief executive of Corixa, said in a statement. Gillis will lead the combined company, which will operate under the Corixa name.
The deal will enable Corixa to take advantage of Coulter's strong sales force and "a late-stage development team to move the company forward," said Thomas Dietz, who follows the companies for
Pacific Growth Equities
and rates both companies' stocks a strong buy.
Wall Street is also taking a careful look at Bexxar, and investors raised some questions about the Coulter acquisition. Corixa's shares were down $7.63, or 17%, at $36.56 in Monday afternoon trading, while Coulter's stock was up $2.44, or 8%, at $33.38.
Coulter and its partner, the pharmaceutical giant
, sent their application for Bexxar to the
Food and Drug Administration
in the summer of 1999, and the government body requested that the companies resubmit their clinical trial data.
Having missed its chance to get a substantial leg up on
, which is developing a similar therapy for non-Hodgkin's lymphoma called Zevalin, Coulter eventually sent a revised application to the FDA last month seeking commercial approval for the drug.
At this point, Coulter hopes to win clearance for Bexxar -- recently given fast-track review status by the FDA -- within six months. Idec, meanwhile, plans to file its so-called biologics license application by the end of the year. The FDA must decide whether to accept the application before considering approval.
"There are certainly investors who are skeptical because of the Bexxar situation, but we feel comfortable with it," said Dietz, whose company has done underwriting for both sides, including Coulter's initial public offering in 1997.
Under the terms of the deal, Seattle-based Corixa said it would exchange 1.003 shares of its stock for each Coulter share at the time of the closing. Based on Coulter's closing price Friday of $30.94, the deal represented a 43% premium for shareholders of South San Francisco-based Coulter. That premium declined Monday, however, with the fall of Corixa's stock price.
The directors and executive officers of Coulter, according to the company, collectively own more than 18% of the company's stock.
Although Corixa reassured analysts that it had done ample due diligence, Wall Street may regard the acquisition as risky, considering the trouble Coulter has had with Bexxar, said Bill Tanner, an analyst at
SG Cowen Securities
The worry among investors is that Corixa's acquisition could backfire if the FDA fails to clear Bexxar, although Coulter possesses technology that would broaden its appeal and perhaps offset anything that happens to Bexxar, Tanner said.
"Obviously the market is a little worried," said Tanner, who rates Corixa stock a strong buy. "People are looking at this deal and saying that's a pretty rich amount to be paying for Coulter." His firm has not done any underwriting for the companies.
But analysts and company officials alike maintain that the accord forms a leader in discovering antigens, which induce the formation of proteins or other substances that stimulate patients' immune systems, and developing them into products.
The Corixa and Coulter combination, moreover, also would have 16 programs in clinical development, 22 pre-clinical programs and 16 corporate partnerships concentrating on autoimmune diseases, cancer and infectious diseases.
Michael Bigham, current president and chief executive of Coulter, would join Corixa's board as vice chairman. The companies said additional announcements regarding management and board positions would be made in coming weeks.