Neopath Being Sold To Autocyte

SEATTLE - NeoPath, the Redmond-based biotech company, is being bought by AutoCyte of Burlington, N.C., in a $106.65 million deal that would result in about a third of NeoPath's workers being laid off.

If the deal is approved by regulators and shareholders, the merged company would be based in North Carolina and would eliminate about 50 duplicate positions in research, sales and administration.

NeoPath would be left with about 100 employees. It now has about 170. It was not immediately clear whether the remaining workers would be based in Redmond.

The deal would allow AutoCyte, a medical-device company, to offer clinical laboratories a full cervical-cancer screening system. AutoCyte makes a Pap-smear test product called Prep. NeoPath makes an automated Pap-smear system called AutoPap.

AutoCyte's Prep system treats slides of cells from Pap tests to allow easier detection of cancer. NeoPath's AutoPap screens for cervical cancer. The combined company will be able to offer a screening system for cervical cancer that covers sample preparation and computerized screening, the companies said.

NeoPath shareholders would get 0.7903 of an AutoCyte share for each NeoPath share. AutoCyte also will assume about $2.5 million in NeoPath debt.

Based on AutoCyte's Friday closing price, the deal values NeoPath stock at $6.12 a share, a 55 percent premium to its Friday close of $3.938. NeoPath stock has been faring poorly recently, however, trading at less than a third of its 52-week high of $12.875, set a year ago. NeoPath went public in January 1995 at $11 and peaked at $30.50 in September 1996.

News of the deal pushed NeoPath stock up 56.3 cents, or 14 percent, to $4.50 at the close of today's trading. AutoCyte stock was down 75 cents to $7.

AutoCyte and NeoPath are currently conducting a joint clinical trial for the screening of Prep slides by the AutoPap system. The companies expect to submit this information to the Food and Drug Administration in the second half of this year, AutoCyte said.

The transaction is expected to be completed in six months.

Information from Seattle Times reporters Michele Matassa Flores and Greg Heberlein and from Bloomberg News is included in this report.