Listen to this article

Warren-based Celgene (Nasdaq: CELG) today said it has entered into an agreement to acquire Signal Pharmaceuticals, a privately held San Diego-based biopharmaceutical company, for about $196 million in stock.

Under the terms of the agreement, which have been approved by the directors of both companies, Celgene will acquire all Signal outstanding shares in a tax-free stock-for-stock merger that will be accounted for under pooling-of-interests treatment. Upon completion of the transaction, Celgene will issue 3,674,800 shares of its common stock in exchange for all of the outstanding capital stock of Signal. The exchange ratio is .1257 Celgene shares for each Signal share.

The transaction is expected to be slightly dilutive in fiscal 2001 and neutral to earnings in fiscal 2002. Completion of the acquisition is subject to approval by Signal”s shareholders and is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act.

Shareholders holding approximately 56% of the common shares and 78% of Signal”s preferred shares have signed irrevocable shareholder agreements in favor of the transaction. If the transaction is not concluded, the agreement requires that Signal grant Celgene options to purchase additional Signal shares and pay a termination fee of up to $10 million.

Signal focuses on the discovery and development of new classes of drugs that regulate genes associated with diseasetechnology is centered in the key areas of intracellular signaling and gene and protein regulation. Its drug discovery engine, accelerates the application of genomics to the development of new classes of gene regulating drugs. This discovery engine enables the company to identify and pursue numerous gene regulating drug targets and drug leads across multiple diseases. Signal researchers have identified 27 drug targets in 10 major gene regulating pathways and 24 novel series of drug leads.

Celgene is a pharmaceutical company specializing in biotechnology research and development. The company currently develops immunotherapeutic compounds for regulating tumor necrosis factor alpha, chirally pure pharmaceuticals and agrochemicals and food-related products. Celgene started in 1986 as a spinoff of the Celenese, which later merged with Hoechst. The company was created to commercialize years of research and development associated with biotechnology. Currently, Celgene is focused on developing small molecule compounds that modulate bodily production of tumor necrosis factor alpha, a hormone-like protein. The companys lead pharmaceutical is Thalomid, its own formulation of thalidomide, the drug that had caused severe birth defects in Europe. In 1997 the company received approval from the FDA for the use of thalidomide for the treatment of ENL, a severe inflammatory condition associated with leprosy.

HOOVER”S ONLINE: Celgene