BioWorld International Correspondent

LONDON - Oxford GlycoSciences plc offered an instant rebuff to a cash offer of £101.4 million (US$160 million) from Celltech plc, claiming it was a spoiling tactic to undermine the all-paper deal agreed to with Cambridge Antibody Technology Group plc in January.

David Ebsworth, CEO of OGS, said of the offer of 1.82 pence per share: "It is clearly opportunistic and a bid to acquire OGS on the cheap."

Peter Fellner, CEO of Celltech, did not dispel this assertion in a teleconference call to announce the hostile bid, saying it was a cash-neutral deal that would allow Celltech, the UK's largest biotechnology company, to acquire some interesting assets. "This clearly for us is not a strategic or transforming acquisition. But it is an opportunity for us to acquire these assets."

For its part, OGS, based in Abingdon, noted the offer represented a 7 percent discount to its closing price the day before it was made last Wednesday, and an acquisition premium of only 19 percent to the share price of OGS on Jan. 22, the day before CAT's paper offer of £109.6 million was made. But since then, CAT's share price has fallen considerably, pushing the value of its offer for OGS down to £83 million on the eve of the Celltech bid. That is such a large discount to OGS's cash balance of £136.4 million on Dec. 31 it now seems unlikely that the merger will get shareholder approval unless Cambridge-based CAT increases its value.

CAT and OGS have several investors in common and increasing the paper bid for OGS would dilute their stake in CAT. CAT could offer some cash, but that would undermine the merger rationale of creating a well-resourced company with the means to build through acquisition.

Certainly, OGS's tactic is to hold out for a higher offer. Apart from CAT and Celltech several other companies have expressed an interest in buying OGS, though no further formal bids have been made. An OGS spokesperson told BioWorld International, "David's [Ebsworth] job is to get the best value he can for OGS. He doesn't think [Celltech's offer] is best value."

Fellner's rationale for acquiring OGS is to access its huge proteomics database of disease-associated proteins, and to integrate OGS's bioinformatics platform to increase Celltech's capabilities in that area. Slough-based Celltech said it is particularly interested in OGS's oncology targets, but this is one of the rare proposed acquisitions of a biotechnology company where the word "synergy" did not feature in the rationale for the offer.

"Overall, OGS would be complementary and enhancing to Celltech's existing technology platforms," Fellner said. "We have talked to OGS about collaboration in the past two years. When it was put up for sale in late January, clearly we immediately thought this was an opportunity we should look at."

OGS has one registered product, Zavesca, which had its first launch this week in the UK. The oral treatment for Gaucher's disease is being marketed by Actelion Ltd., of Allschwil, Switzerland. Fellner said Zavesca would be a profitable product for Celltech, though it would also consider selling it. Celltech would also divest OGS's proteomics services division and any targets it did not want to exploit in-house.

CAT did not make any formal comment on the counterbid.