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TAKING STOCK

SYNERGEN INC. NEVER SUCCEEDED IN MAKING ANYTHING--EXCEPT ITS FORMER EXECUTIVES VERY RICH.

Despite what seemed to be the impending, inevitable success of Antril--and thus Synergen--several executives apparently decided to make hay while the market suns were shining. They sold stock--lots of it. And as luck would have it, they redeemed their shares at the exact moment Synergen's stock was trading at its highest value.

For example, according to Securities and Exchange Commission documents, in January 1992, Michael Catalano, who at the time directed clinical research, unloaded 12,000 shares at $66.43 and collected $797,000. Four days later, co-founder Hirsh sold 35,000 of his Synergen shares at $67.32, for a take of $2.36 million. A day after that, Jon Saxe, then the company's president, let go of 20,000 of his shares at $68 each, raking in $1.36 million in the process.

And during the first week of January 1992, Soll himself sold a total of 55,000 Synergen shares. According to SEC filings, they fetched prices of anywhere between $65 and $73.50. Soll's total take: nearly $3.8 million.

The company continued surging throughout that year. In September 1992 Synergen opened a $45 million protein-production plant in Boulder. The sparkling new facility was designed to manufacture a key ingredient for Antril.

But in early 1993 Synergen's fortunes slipped. On Friday, February 19, the company learned that its latest clinical trials showed Antril was not nearly as effective as had been hoped.

The following Monday, Synergen announced to the world that its trial tests on Antril had been "disappointing." By the end of the day, the company's stock price had plummeted by a heart-stopping $29. The following day, flabbergasted investors--and eager lawyers--filed eight separate lawsuits, claiming that Synergen's executives had misled them about Antril's potential.

The fallout continued. In April President Saxe and clinical director Catalano resigned. The two men cited "differences in management philosophy" as the reason for their departure, but most observers suspected they were taking the fall for the poor performance of the company's best hope for a salable product.

Despite Antril's failure in the clinical trials, though, Synergen's scientists thought they saw a ray of hope. Data from the tests seemed to suggest that, even though the drug didn't work on a broad range of sepsis patients, it still might help the most severely ill ones. So in August 1993 the company launched new Phase III trials, which it hoped would prove that Antril still had some worth, although with a drastically reduced potential market.

That light flickered out less than a year later. On July 15, 1994, the company learned the results of those Phase III tests: Antril simply didn't work. The following day, a Saturday, Synergen held its company picnic. Since none of the employees had been told of the test results, everyone seemed to have a good time. On Monday the company announced that it was giving up on Antril, the product on which Synergen had staked its corporate life.

The company's future looked bleak. More than half of its $300 million stake was gone. And on the day Synergen announced that Antril was a bust, its stock free-fell 49 percent. Two weeks later, on August 1, the company laid off 60 percent of its 625-member workforce. By then its stock was trading at a miserable $3.88.

Recognizing that they'd soon run out of money, Synergen's officers began looking for "strategic alliances" with other companies--in other words, a bailout. One obvious choice was Amgen.

Amgen was everything that Synergen had hoped to become. When the Thousand Oaks, California, company placed its initial stock offering in 1983, shares sold for $18. Since then, the company has produced two blockbuster drugs and its stock has soared. Today Amgen has sales of nearly $1.5 billion. "I have subscribers who have made 100 times their investment on Amgen," says Jim McCamant, editor of the Medical Technology Stock Letter.

According to SEC filings, Synergen and Amgen had discussed the possibility of a business relationship as early as 1989. And as Synergen's future began to cloud in 1993, company officials again met with Amgen executives to discuss licensing Synergen's potential products. In November of that year, at a Los Angeles meeting, Synergen CEO Greg Abbott proposed that Amgen provide a cash infusion; Amgen declined.

In July 1994, after Antril had finally been declared a failure, Abbott and Amgen's CEO, Gordon Binder, talked again by phone. Several weeks later the companies' financial officers met in Boulder. On August 22, Synergen and Amgen signed a confidentiality agreement, and Synergen opened its books to Amgen's scientists and bean counters. On October 24 Amgen's top execs flew one more time to Boulder and met with Synergen's top four officers.

Three weeks after that, on November 17, what was left of Synergen found a new home. Amgen publicly announced that it was buying the Boulder company. The price: $262 million.

The hefty price tag was deceptive, however.
Among other things, Amgen was buying Synergen's cash--the Boulder company still had an estimated $105 million in cash reserves. Amgen also acquired Synergen's operating losses, which industry analysts calculate translated into at least another $35 million in tax writeoffs for Amgen. Finally, Amgen inflated its offer to include the estimated settlement price of the shareholder class-action lawsuit then pending against Synergen. That case was settled this March for $28 million; Synergen admitted no wrongdoing.

Subtract all those things, plus the value of Synergen's Boulder complex, and Amgen got Synergen for closer to $70 million. That still may seem like a prodigious chunk of change. But analysts say it's peanuts for a company that once was considered one of the most promising biotech stocks in the country.

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