- The Washington Times - Thursday, June 14, 2001

Celera Genomics, the Rockville company known for mapping the human genome, is moving toward becoming a drug developer, saying yesterday that it would buy Axys Pharmaceuticals Inc. for about $177 million in stock.
Axys, of San Francisco, has chemistry capabilities that Celera plans to use to evaluate genes and proteins and test them against chemical compounds. The company then would develop those compounds into new drugs.
"Celera for a while now has indicated interest in moving to the drug-development arena," said Emily Hall, an analyst with Morningstar in Chicago. "They had two options: to buy or build."
The offer of $4.65 per share payable in Celera common stock is based on the company's Tuesday closing price. The boards of both companies gave the deal a green light, but it is subject to approval by Axys stockholders and regulatory agencies.
News of the acquisition, which the companies are treating as a merger, did not surprise analysts, and shares of Celera remained mostly unchanged yesterday on the New York Stock Exchange, closing at $42.35, up 60 cents from Tuesday's close.
Shares of Axys closed at $4.36, up 91 cents on the Nasdaq Stock Market.
Acquiring Axys moves Celera into the second stage of its business plan. The first was to map the human genome and begin generating revenues by selling subscriptions to its genetic database. Having published the genetic map in Science magazine in February, Celera now is moving into molecular diagnostics.
The company's scientists are looking for differences between normal and disease-ridden human tissues and trying to identify specific disease markers in the genetic makeup of people who suffer from certain conditions.
This stage will take at least several years, analysts say. Celera then will move into the third and final part of its business plan: identifying small molecules in the markers that can be used as therapeutics and testing them as potential drugs.
Axys is a relatively small biotechnology company that focuses its research on osteoporosis, asthma, inflammatory and autoimmune conditions, and cardiovascular disease.
It brings to Celera its partnerships with several large drug makers like Merck & Co., Aventis Pharmaceuticals Inc., and Bayer AG, as well as a research facility in San Francisco, and another 43,000-square-foot chemistry facility that is slated for completion this year.
"What Celera has gotten is the foundation of a drug-development company without having to pay huge amounts for it, and less than they would have had to pay for a company with several drugs in clinical trials or with a drug on the market," Miss Hall said.
Another analyst, Aaron Geist with Robert E. Baird & Co., in Milwaukee, said he believes Axys to be the first of several acquisitions Celera will make in the next few years.
"Axys is giving Celera small molecule and chemistry capabilities, but it doesn't give them the ability to take them to clinical trials for drugs and ultimately have them approved," Mr. Geist said.
In March, Celera bought a stake in HuBit Genomix Inc., a Japanese venture to analyze genetic variations responsible for certain human traits, illnesses and drug tolerance. And with more than $1 billion in cash, the company is well positioned to make acquisitions at any time, analysts say.
Celera has more than 40 clients for its genetic database, including newly signed Johns Hopkins University and the Jackson Laboratory.
The increasing number of clients has helped Celera rack up $42.8 million in sales in fiscal 2000. That's almost four times as much as the year before.
For its third fiscal quarter ended March 31, Celera said net sales rose 112 percent to $23.38 million from $11.04 million a year before. Meanwhile, losses grew to $29.09 million (48 cents per diluted share) from $24.11 million (45 cents). Diluted shares reflect the value of options, warrants and other securities convertible into common stock.

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