CuraGen Corporation and Roche have announced that 454 Life Sciences and Roche have signed a definitive merger agreement under which Roche will acquire 454 Life Sciences Corporation, a majority-owned subsidiary of CuraGen Corporation.
Under the terms of the agreement 454 Life Sciences' shareholders will receive up to $154.9 million in cash of which Roche will pay $140 million in cash, and up to approximately $14.9 million will be received from the exercise of stock options issued and outstanding prior to the acquisition.
Of the $140 million from Roche, $25 million will be placed in escrow for a period of 15 months. On a fully diluted basis, presuming exercise of all outstanding stock options, CuraGen expects to receive approximately $85 million before fees and expenses, of which approximately $14 million will be held in escrow.
"We are pleased to announce the successful implementation of this strategic initiative regarding 454 Life Sciences, which allows us to gain liquidity on our investment and to extend our runway to bring our oncology products to market," commented Frank M. Armstrong, M.D., President and Chief Executive Officer of CuraGen Corporation.
"Already in 2007 we have strengthened our balance sheet by paying off our outstanding 2007 convertible debt of $66.2 million and we are now monetizing our investment in 454 Life Sciences. During the remainder of 2007, CuraGen will continue to generate important clinical trial results on velafermin, belinostat, and CR011-vcMMAE, that we believe will enable us to advance one or more of these products into Phase III development by 2008."
CuraGen established 454 Life Sciences as a majority-owned subsidiary in 2000 with the mission of developing and commercializing next-generation sequencing technology. 454 Life Sciences and Roche signed a research and marketing collaboration in May 2005 that extends until September 30, 2010, under which Roche Diagnostics has been acting as the exclusive worldwide distributor of the Genome Sequencer systems and associated reagents to all markets with the exception of regulated diagnostics.
Through this acquisition, Roche Diagnostics will now obtain access to 454 Life Sciences' future generations of sequencing products and the use of 454 Sequencing™ in regulated diagnostic applications.
Roche plans to maintain the 454 Life Sciences facility in Branford, Connecticut with its 167 employees as a fully integrated part of the Roche Diagnostics organization.
This transaction, which is subject to certain closing conditions, including regulatory approvals, is expected to close in the second quarter of 2007. Approval by CuraGen shareholders or Roche shareholders is not required for the transaction to be consummated.