Collapse in proposed merger of Cytogen, Advanced Magnetics

Radiopharmaceutical firm Cytogen’s planned acquisition of MRI contrast developer Advanced Magnetics is over. But the demise of the deal won’t prevent the two firms from working closely together.

The companies, which announced the proposed $60 million acquisition on July 10, have decided instead to enter into a series of marketing, licensing, and supply agreements.

Under the new agreements, Princeton, NJ-based Cytogen will acquire certain product rights to Advanced Magnetics’ imaging agents in exchange for two million shares of Cytogen common stock.

Cytogen will have exclusive U.S. rights to Advanced Magnetics' Combidex MRI contrast agent for the detection of lymph node metastases, as well as exclusive U.S. rights to Advanced Magnetics’ work-in-progress Code 7228 imaging agent for oncology applications. It will also have the right of first negotiation for applications outside of oncology.

Advanced Magnetics will be responsible for all costs associated with clinical development, supply, and manufacturing of Combidex and Code 7228. In addition to providing Cytogen with these agents, Advanced Magnetics, of Cambridge, MA, will receive royalties based upon product sales, according to the firms.

Both firms agreed that the advantages of a marketing and supply arrangement outweighed the near-term benefits of the merger, according to Cytogen’s president and CEO Joseph Reiser, Ph.D.

Advanced Magnetics has received an approvable letter for Combidex from the Food and Drug Administration, with marketing approval subject to certain conditions. The companies have agreed to establish project teams to cooperate on the development of Combidex and Code 7228.

In exchange for marketing rights to Combidex and Code 7228, Cytogen has agreed to issue two million shares of Cytogen registered common stock to Advanced Magnetics. Of these shares, 1.5 million shares were issued at closing, of which 1.2 million are subject to certain lockup restrictions, and 500,000 were put into escrow subject to the achievement of certain milestones, according to the firms.

By Erik L. Ridley staff writer
August 28, 2000

Related Reading

Cytogen revenues slip in Q2, August 8, 2000

Cytogen to acquire Advanced Magnetics, July 10, 2000

Cytogen taps Hoffman as CFO, July 10, 2000

Cytogen applies for European clearance of ProstaScint, June 26, 2000

Advanced Magnetics agent gets approvable letter, June 22, 2000

Advanced Magnetics revenues drop sharply in Q2, April 21, 2000

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