Generic drugmaker Ivax Corp. is venting frustration while it regroups in the aftermath of Bergen Brunswig Corp.'s unceremonious termination of their proposed $1.5 billion merger.
Until now, Miami-based Ivax has kept largely silent except for issuing a terse statement last month when Bergen, an Orange, Calif.-based drug and medical-surgical distributor, walked away from the deal. The next day, Bergen turned around and sued Ivax for recovery of a $50 million fee and a variety of damages. Bergen alleged Ivax breached their merger agreement, which would have teamed the largest generic drugmaker with one of the top drug wholesalers.
Bergen won't say in public what Ivax allegedly did that made the company call off the deal.
In recent filings with the Securities and Exchange Commission, however, Ivax makes it clear that it believes Bergen is to blame for the soured deal and is readying a legal counterattack to make its point.
"Ivax does not believe (Bergen Brunswig) had a legal right to terminate the agreement and intends to defend the suit vigorously and pursue a counterclaim for breach of the agreement," according to an Ivax statement signed by general counsel Armando A. Tabernilla and filed with the SEC on March 28.
Exactly what Ivax allegedly did remains a deep mystery because Bergen's suit is still under seal in federal district court in New York.
Further fueling the intrigue are SEC filings made by both companies last month that reassert options to buy 19.9% stakes in each other under the original merger agreement. Even more curious are clauses in those filings that would apparently let each company collect compensation from the other based on the value of the current options, without even exercising them.
Bergen declined to comment on its beef against Ivax or the option plan, citing the ongoing litigation. Ivax did not return calls for comment.
However the companies resolve their spat, Ivax's recent setbacks are a continuation of the rough road it has traveled recently.
The failed merger with Bergen, for instance, is the second canceled marriage in two years. In 1995, Ivax's planned merger with Norway's Hafslund Nycomed, a manufacturer of drugs and contrast agents, was aborted by Nycomed shareholders.
And for most of the past year, Ivax has drifted through a series of money-losing quarters.
In the first quarterly report to be issued to shareholders since October, Phillip Frost, M.D., Ivax chairman and chief executive officer, seemed miffed that the company has not been given its due.
In describing the hiring last month of former Cordis Corp. executive Robert Strauss as Ivax's president and chief operating officer, Frost wrote: "As at Cordis, Bob is charged with advancing Ivax to its rightful place in the healthcare industry."
Until Johnson & Johnson acquired Miami-based Cordis for $1.8 billion in February 1996, Strauss was its chairman, president and CEO. He replaced Ivax's former COO Richard Pfenniger, who resigned to become chief executive at Whitman Education Group, Miami, which trains users of ultrasound devices.
Later on in his shareholder letter, Frost mapped out a strategy for life without Bergen Brunswig that involves increasing efficiencies in Ivax's core generic drug business and producing proprietary pharmaceuticals of its own.
Ivax last month filed an application with the Food and Drug Administration for approval of paclitaxel, trademarked as Taxol by Bristol-Myers Squibb, in the treatment of Kaposi's sarcoma, a cancer frequently associated with AIDS. And sales of Elmiron, a proprietary drug for treatment of interstitial cystitis, a painful bladder disease, have been "encouraging," Frost wrote in the letter.
Most industry analysts downgraded Ivax's stock after the Bergen deal fell through, but a few remain hopeful that Ivax can eventually deliver on its promises.
"Ivax is just like a team that's come off a tough season," said David Saks, a drug industry analyst at Gruntal & Co. in New York. "In the past they were terrific, and they're taking the right steps forward, it appears."