SGX Pharmaceuticals, Inc. (SGXP)

[surf1944]

Lilly to Acquire SGX Pharmaceuticals
Tuesday July 8, 4:05 pm ET
Deal Expands Lilly's Structure-Based Drug Discovery Capabilities
another small cap buyout
INDIANAPOLIS, and SAN DIEGO, July 8 /PRNewswire-FirstCall/ -- Eli Lilly and Company (NYSE: LLY - News) and SGX Pharmaceuticals, Inc. (Nasdaq: SGXP - News) today announced that the companies have signed a definitive merger agreement providing for the acquisition of SGX in an all-cash transaction. SGX, based in San Diego, California, is a biotechnology company focused on drug discovery and development in the area of oncology. Under the terms of the agreement, Lilly will acquire all of the outstanding shares of SGX common stock at a price of $3.00 per share, for a total purchase price of approximately $64.0 million.

The acquisition will allow Lilly to integrate SGX's structure-guided drug discovery platform into its drug discovery efforts. It will also give Lilly access to FAST(TM), SGX's fragment-based, protein structure guided drug discovery technology, and to a portfolio of pre-clinical oncology compounds focused on a number of high-value kinase targets.

Since entering into an initial collaboration in 2003, Lilly has partnered with SGX to determine 3-dimensional structures of key Lilly drug targets utilizing SGX's proprietary x-ray crystallography technology. The ongoing collaboration also provides Lilly with access to the SGX synchrotron beamline facility, SGX-CAT, which is a state-of-the-art synchrotron facility enabling X-ray crystallography and protein structure determination built by SGX at the Advanced Photon Source (APS) located at the Department of Energy's Argonne National Laboratory in Chicago, IL.

"After a successful collaboration over the past several years, we are excited to bring the scientific and technological expertise of SGX into Lilly's research organization, while at the same time expanding our presence in the San Diego area," commented Steven M. Paul, M.D., executive vice president, science and technology for Lilly. "We will leverage the combined resources of both companies to strengthen our structural biology capabilities and seek out innovative therapies for patients."

"We believe that this merger provides an excellent opportunity for the potential of SGX's platform and pipeline to be realized, while simultaneously providing our shareholders with attractive financial terms," said Mike Grey, CEO of SGX Pharmaceuticals. "As we have evolved from a platform technology organization to a drug discovery company, we believe that this transaction represents a timely opportunity to place our programs and technology assets in the hands of a world-class company with the experience and resources to advance innovative treatments for patients."

The board of directors of SGX voted unanimously to approve the merger agreement and to recommend that its shareholders approve the transaction. The transaction is expected to close in the second half of 2008. Closing is contingent upon approval by SGX shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act and certain other closing conditions. Upon the closing of the transaction, Lilly will incur a one-time charge to earnings for acquired in-process research and development, but it is premature to estimate what that charge will be.

SGX Conference Call and Webcast Today

SGX will hold a conference call at 2:00 p.m. Pacific Time today, to discuss the planned acquisition of SGX by Lilly. Interested participants and investors may access the teleconference call by dialing 866-202-3109 (U.S./Canada) or 617-213-8844 (international), participant code 57202140. A telephonic replay will be available for seven days following the call. Access numbers for this replay are 888-286-8010 (U.S./Canada) and 617-801 6888 (international), participant code 98547622.

A live webcast will be available under the investor relations section of SGX's website at http://www.sgxpharma.com. Replays of the webcast will be available for 30 days following the event. Please contact SGX's website several minutes prior to the start of the broadcast to ensure adequate time for any software download that may be necessary.