Ocata investors scramble to nix Astellas' $379M buyout at the 11th hour

Ocata CEO Paul Wotton

Shareholders of Ocata Therapeutics ($OCAT) are working to block Astellas Pharma's move to acquire the company for $379 million in a deal they say undervalues the stem cell biotech, soliciting alternative bids as a deadline looms.

The buyout agreement, announced last month, presents a 79% premium to Ocata's then share value, and management heralded it as an ideal end for a company with a long, rocky history. But, as the Boston Globe reports, a group of jilted shareholders have been agitating to kill the deal in the ensuing weeks, reaching out to potential white knights, elected officials and federal regulators in hopes of fetching a higher price for Ocata.

The company's self-described biggest investor, Gary Aronson, told the Globe the Ocata's value "should be at least double," and he is now working with a team of consultants to pitch and vet rival bids, holding discussions with more than 20 companies who might step in with larger offers. The issue, shareholders say, is that Astellas' bid focuses solely on Ocata's stem cell assets in ophthalmology without accounting for the company's preclinical projects in auto-immune and other diseases. The $379 million figure amounts to "giving the company away," one investor told the Globe.

But the Ocata agitators may be running out of time. The tender period--in which Ocata shareholders can choose whether to sell their stakes to Astellas--expires today, and if the majority of stock owners sign off on the deal, keeping a merger at bay would become much more difficult if not impossible.

Ocata, formerly Advanced Cell Technology, is one of the pioneers of therapeutic stem cell development, surviving the highs and lows of the field since its foundation in 1994. Beset by the clinical troubles that plagued a whole generation of embryonic stem cell biotechs, the company has flirted with penny-stock territory and endured multiple reorganizations in its history. Taking the name Ocata last year, the biotech has since narrowed its focus to treatments for disorders of the eye, advancing clinical programs in Stargardt's disease and macular degeneration.

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