American Home purchases remainder of biotech firm

February 1, 1997

Pharmaceutical Representative

American Home Products, Madison, NJ, will acquire the 40% stake of Genetics Institute Inc., a biotech company, that it does not already own for $1.25 billion.

American Home Products, Madison, NJ, will acquire the 40% stake of Genetics Institute Inc., a biotech company, that it does not already own for $1.25 billion.

Genetics Institute, Cambridge, MA, has a strong portfolio of treatments for hemophilia, anemia and cancer. The biotech company will become a separate subsidiary of American Home.

Under terms of the 1992 agreement under which American Home initially acquired a 60% interest in Genetics Institute, the company was granted the option to acquire the remaining equity interest at the exercise price of $85 per share.

When it entered the agreement four years ago, American Home recognized the potential in Genetics Institute to be a premiere biotechnology company and the need to have biotechnology capabilities in order to be a top-tier pharmaceutical company, according to John Stafford, chairman, president and CEO of American Home.

The purchase permits the company to coordinate its research efforts with those of Genetics Institute.

The acquisition will reduce American Home's projected 1997 earnings per share by less than 3%, the company said. "The initial minimal dilution in earnings will be overcome by the commercialization of innovative and profitable biotechnology products," Stafford said.

At press time, Genetics Institute was planning to submit its biological license application on Neumega (IL-11) for stimulating the growth of platelets. The company recently received a unanimous recommendation for approval from an FDA medical advisory committee for BeneFix coagulation factor IX (recombinant), a blood clotting therapy used to treat hemophilia B. PR