13 Biotechnology Law Report 520 (Number 4, July-August 1994)

{BLR 1805} Cytogen-

CytoRad-

SWORDs.

CYTOGEN V. CYTORAD?— Parent and Offspring Do Battle

PRINCETON, NJ 6/94—

Industry watchers are following the unusual disputebetween a biotechnology company and its offspring set up under a SWORD (stock warrant,off-balance sheet R&D financing) arrangement. Usually, each party's obligations andprocedures are carefully spelled out in the contracts establishing such subsidiaries, but thatappears not to have been true here.

The dispute is between Cytogen, founded in 1981, and CytoRad, which was foundedin February 1992 to raise money for the parent firm. To date, CytoRad has raised about $40million, of which about $22 million has been turned over to Cytogen. However, in March1994, CytoRad refused to make a requested payment, citing concerns about loss of seniormanagement personnel (who also held positions at CytoRad) and problems with productdevelopment.

In May, Cytogen made an offer to purchase CytoRad in a stock swap deal that WilliamJ. Ryan, Chairman and CEO of CytoRad, told shareholders was "so inadequate that it did noteven provide a basis for negotiations." (Ryan is one of the top managers to have left Cytogenin the last year, having resigned as VP and general counsel at the request of the CytoRadboard.)

Cytogen contends that if CytoRad continues to withhold the requested research funds,the latter company will be guilty of breach of contract. Such a finding would cause the productand rights for various monoclonal antibodies to revert to Cytogen. For its part, CytoRadcontends that it is Cytogen that has breached the contract by failing to provide information thatwould justify delivery of funds. CytoRad has hired its own legal counsel.

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{BLR 1806} Millipore Corp.-

PerSeptive Biosystems-

Scientific Instrumentation.

PerSeptive Biosystems to acquire Millipore division— Terms Not Yet Known

CAMBRIDGE, MASS. 7/5/94 — PerSeptive Biosystems, Inc., a maker of productsfor the purification and analysis of biomolecules, is to acquire the BioSearch Division ofMillipore Corp. BioSearch supplies instruments and reagents for DNA and peptide synthesisand fluorescence-based assays. The terms of the acquisition will be announced when the finalagreement is signed.

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