Gene Logic to Buy OncorMed in $38 Million Deal
Goldreich, Samuel, The Washington Times (Washington, DC)
Gene Logic Inc. said yesterday that it will buy OncorMed Inc. for as much as $38.2 million in stock in a deal that would boost the two Gaithersburg companies' chances of turning a profit on genetic research.
The sale continues the growth spurt for Gene Logic, a 2-year-old drug-discovery company that went public in November with a $24 million initial stock offering.
Buying OncorMed allows Gene Logic to expand into new areas of research without having to seek additional capital from the stock or bond markets, said Elizabeth Silverman, a biotech analyst with BancAmerica Robertson Stephens in New York.
"Gene Logic is a very opportunistic company, and you have a situation where the public markets aren't conducive to raising capital right now," she said.
The deal also strengthens Gene Logic's position in marketing itself as a partner to pharmaceutical companies.
"We believe Gene Logic will achieve, in a highly cost-effective way, the critical mass and range of technologies necessary to support key aspects of the drug discovery and development process," said Dr. Michael J. Brennan, Gene Logic's president and chief executive.
Gene Logic is expected to reach profitability by 2000 and produce earnings by 2002 that justify a stock price of $16 to $17, Ms. Silverman said. The company's stock closed at $7.94, down 25 cents yesterday on the American Stock Exchange.
Gene Logic has deals with major drug companies that are expected to generate more than $300 million in revenue over the next five years.
The company's stock hit $10.13 July 1, when it announced a partnership with German chemical companies Schering AG and Hoescht AG to develop genes that protect crops. Gene Logic could collect fees of more than $45 million over the next five years in that deal alone. …