Value Transfusion: Vitex Merges with Panacos Pharmaceuticals

V.I. Technologies Inc. (Vitex), a developer of pathogen inactivation technologies for donor blood, has agreed to acquire privately-held Panacos Pharmaceuticals Inc. in a stock swap valued at approximately $26.25 million at current stock prices. [See Deal]. Panacos shareholders will hold 31.5% of the new company after the merger, subject to the approval of shareholders by the end of August. Vitex shareholders will own the remaining 68.5%. Superficially, the deal appears to be fairly typical pipeline building: Vitex has a late-stage blood safety product, Inactine, in Phase III clinical trials, and Panacos Pharmaceuticals offers a Phase I anti-HIV compound, which is in line with VI Technologies' expertise in blood-borne infectious diseases.

But the deal is really about value creation, or rather value salvation, as Vitex, along with all others in the pathogen inactivation market, has taken too long to get its...