Filed by Epitope, Inc.
pursuant to Rule 425
under the Securities Act
of 1933, as amended
Subject Company: STC Technologies, Inc.
Epitope's Commission File No. 1-10492
[Logo] EPITOPE [Logo] STC Technologies Inc.
COMPANY CONTACTS: REPRESENTING EPITOPE:
Epitope, Inc. Lippert/Heilshorn & Associates
Charles E. Bergeron Bruce Voss 310-575-4848 bruce@lhai.com
Chief Financial Officer Kim Sutton Golodetz 212-838-3777 kim@lhai.com
503-641-6115 Keith Lippert 212-838-3777 keith@lhai.com
www.epitope.com MEDIA CONTACT:
Pamela Rigler 212-838-3777 Pamela@lhai.com
www.lhai.com
STC Technologies, Inc.
Mike Gausling Rich Hooper
(mgausling@stctech.com) (rhooper@stctech.com)
Chief Executive Officer Chief Financial Officer
610-882-1820 610-882-1820
www.stctech.com
EPITOPE AND STC TECHNOLOGIES TO MERGE
$200 MILLION ALL-STOCK DEAL CREATES ORAL FLUID AND
POINT-OF-CARE MEDICAL DIAGNOSTICS LEADER
BEAVERTON, ORE. (MAY 8, 2000) - EPITOPE, INC. (NASDAQ NM: EPTO) today announced
that the Company has signed a definitive merger agreement with STC Technologies,
Inc., a privately-held company based in Bethlehem, Pennsylvania, under which the
two companies will become a leader in the fast-growing oral fluid and
point-of-care medical diagnostics industry. The agreement has been approved by
the Board of Directors of each company, and is subject to typical terms and
conditions, including a vote of Epitope and STC shareholders expected to take
place in August 2000. The holders of approximately 52 percent of the STC's
shares have given irrevocable proxies to vote in favor of the merger.
STC shareholders will receive Epitope common stock in the merger. The total
number of Epitope shares to be issued will be based on the average closing price
of Epitope common stock over a 20 trading-day period prior to the completion of
the merger. At the current stock price, it is estimated that Epitope would issue
a total of 20 million shares to holders of STC's outstanding shares and options.
On a proforma basis, the new company will have more than $20 million in cash,
trailing 12-month revenues of $26.3 million, a gross margin of 65%, and a net
loss of $4.1 million. Combining
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operations is expected to result in at least $2 million in savings due to cost
synergies from the consolidation of duplicate overhead and consolidation of
certain manufacturing operations. For the 12 months ended March 31, 2000, STC
Technologies posted revenues of $14.8 million and a net loss of $1.0 million.
The combined company will be renamed OraSure Technologies, Inc., will be
incorporated under Delaware law, and will be headquartered in Bethlehem,
Pennsylvania. Robert D. Thompson, Epitope's president and chief executive
officer, will be chief executive officer at the new company. Michael Gausling,
STC's president and chief executive officer, will be president and chief
operating officer. The Epitope facility in Beaverton, Oregon will continue to
focus on its current activities in the field of infectious disease.
Together, Epitope and STC will leverage their expertise in oral fluid
technology, infectious disease testing and substance abuse testing. The merger
combines the developers of the premier oral fluid collection device with the
leaders in oral fluid assay development. Epitope's OraQuick(R) rapid assay
platform and STC's Up-Converting Phosphor Technology (UPT(TM)), which are under
development for a broad range of medical diagnostic applications, will provide a
substantial product pipeline for the combined company.
"Merging these two great companies hits dead-center on our shared mission to
become the world's pre-eminent oral fluid diagnostic company," said Mr.
Thompson. "OraSure Technologies will have the intellectual capital and the
technology platforms to extend the reach of oral fluid testing, touching
millions of lives. With our three platform technologies- OraSure(R), OraQuick,
and UPlink(TM), - we will be extremely well positioned to commercialize a
variety of oral fluid testing platforms for new and existing-use applications.
The combination of laboratory accuracy, point-of-care speed and convenience,
non-invasive anytime-anywhere collection, and competitive economics ensures a
prominent place for rapid oral fluid testing in the future of in-vitro
diagnostics. We intend to be the company that makes it happen."
"Over the past several years, Epitope and STC pioneered oral fluid testing in
the life insurance market. Most recently, the companies collaborated to
commercialize Intercept(TM), the first laboratory based oral fluid test for
drugs of abuse, using the OraSure platform technology," said Mr. Gausling. "This
heritage gives us a great foundation for commercializing exciting new products
and technologies with a broad range of licensing opportunities."
OraQuick HIV is under development as the first product in the OraQuick line. The
product is a visually read, oral fluid testing device, which can detect HIV
antibodies within 20 minutes. The company expects to launch the product
internationally in July 2000 and is preparing to enter clinical trials in the
United States. The company plans to expand the OraQuick product line to include
tests for a variety of medical diagnostic applications.
UPT is a proprietary label detection technology being developed by STC. This
enabling technology utilizes submicron phosphor particles that convert infrared
light to visible light. When used in conjunction with antibodies or DNA as a
probe label, UPT assays produce no background signal, which dramatically
increases the sensitivity of the test system. In addition to eliminating
background signal, these particles allow simultaneous detection of multiple
biological markers by the use of different UPT particle colors, as well as
miniaturization of the test platform and a permanent record of the test results
because of the stability of the UPT particles. STC has demonstrated the utility
of UPT labels in a lateral flow format for use in a variety of diagnostic
applications under the UPlinktrademark. The first UPlink product will be a
point-of-care system used to detect drugs of abuse in oral fluids, which is
expected to be launched in the second half of 2001. STC has
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collaborated with SRI International, Menlo Park, CA, and Leiden University, the
Netherlands, on the development of the UPT technology. The Company has broad
patent protection for the use of UPT for biological applications.
The actual number of shares to be issued in the merger is subject to adjustment
as follows: (i) issuance of 25 million shares if the average Epitope stock price
is between $6 and $8 per share, (ii) issuance of Epitope stock worth $200
million if the average Epitope stock price is between $8 and $10 per share,
(iii) issuance of 20 million shares if the average Epitope stock price is
between $10 and $13 per share, and (iv) issuance of Epitope stock worth $260
million if the average Epitope stock price is above $13 per share. It is
anticipated that Epitope shareholders will own, on a fully diluted basis,
approximately 50% of the combined company at the time the merger is affected,
subject to the average Epitope stock price prior to the merger. The merger will
be tax free to the stockholders of both companies and is expected to be
accounted for as a pooling of interests.
Deutsche Banc Alex. Brown advised Epitope in this transaction, while Robertson
Stephens advised STC Technologies. Robert Thompson, Mike Gausling and Dr. Sam
Niedbala, chief science officer of STC, will be presenting at the DB Alex. Brown
healthcare conference on May 11, 2000.
The company will hold a conference call to discuss this announcement beginning
at 11:00 a.m. Eastern Time today. Individual investors are invited to listen to
the conference call over the Internet through Vcall, a service of the Investor
Broadcast Network, at www.vcall.com. To listen to the live call, please go to
the Web site at least 15 minutes prior to the start of the call to register,
download and install any necessary audio software. In addition, a replay will
begin shortly after the call has ended and will be available for 90 days.
STC Technologies, Inc. develops, manufactures and markets proprietary in vitro
diagnostic products and medical devices for use in clinical laboratories,
physician offices and workplace testing. STC is the leading supplier of oral
fluid assays to the insurance risk assessment testing market and also
manufactures and markets other substance abuse testing products. Epitope, Inc.
develops, manufactures and markets medical devices and diagnostic products
utilizing its proprietary oral fluid technologies for sale to public- and
private-sector clients worldwide. The Company's primary focus is on the
detection of HIV antibodies, with emphasis in the U.S. life insurance and global
public health markets, and on the use of oral fluid testing for the detection of
drugs of abuse and other analytes.
This press release contains forward-looking statements. Actual results could be
significantly different. Factors that could affect results include those
relating to the proposed merger, including failure to achieve expected
synergies, failure to obtain required regulatory or shareholder approval, and
unexpected liabilities resulting from the two companies' operations prior to or
after the merger occurs. Other factors that could affect results include loss of
key personnel; failure to comply with regulations of the FDA or other regulatory
agencies; obstacles to international marketing of products; loss or impairment
of sources of capital; ability to develop product distribution channels; ability
to develop new products; development of competing products; market acceptance of
oral fluid testing products; and changes in international, federal or state laws
or regulations. Although forward-looking statements help to provide complete
information about future prospects, readers should keep in mind that
forward-looking statements are much less reliable than historical information.
ADDITIONAL INFORMATION AND WHERE TO FIND IT:
EPITOPE PLANS TO FILE A REGISTRATION STATEMENT ON SEC FORM S-4 IN CONNECTION
WITH THE MERGER AND TO MAIL A PROXY STATEMENT/PROSPECTUS TO EPITOPE AND STC
SHAREHOLDERS CONTAINING INFORMATION ABOUT THE MERGER. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS CAREFULLY WHEN THEY ARE AVAILABLE. THE REGISTRATION
STATEMENT AND THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION
ABOUT EPITOPE, STC, THE MERGER AND RELATED MATTERS. INVESTORS AND SECURITY
HOLDERS WILL BE ABLE TO OBTAIN FREE COPIES OF THESE DOCUMENTS THROUGH THE WEB
SITE MAINTAINED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION AT
HTTP//WWW.SEC.GOV.
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EPITOPE FILES ANNUAL, QUARTERLY AND SPECIAL REPORTS, PROXY STATEMENTS AND OTHER
INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION. YOU MAY READ AND COPY
ANY REPORTS, STATEMENTS AND OTHER INFORMATION FILED BY EPITOPE AT THE SEC PUBLIC
REFERENCE ROOMS AT 450 FIFTH ST., N.W., WASHINGTON, D.C. 20549 OR AT THE
COMMISSION'S OTHER PUBLIC REFERENCE ROOMS IN NEW YORK AND CHICAGO. PLEASE CALL
THE COMMISSION AT 800/SEC-0330 FOR FURTHER INFORMATION ON PUBLIC REFERENCE
ROOMS. COPIES OF EPITOPE'S FILINGS WITH THE COMMISSION ALSO ARE AVAILABLE TO THE
PUBLIC FROM COMMERCIAL DOCUMENT-RETRIEVAL SERVICES AND MAY BE OBTAINED FOR FREE
AT THE WEB SITE MAINTAINED BY THE COMMISSION AT HTTP//WWW.SEC.GOV, OR BY WRITING
EPITOPE AT: EPITOPE INVESTOR RELATIONS, 8505 SW CREEKSIDE PLACE, BEAVERTON,
OREGON 97008.
EPITOPE, ITS DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN MEMBERS OF MANAGEMENT AND
EMPLOYEES MAY BE SOLICITING PROXIES FROM EPITOPE SHAREHOLDERS IN FAVOR OF THE
APPROVAL OF THE MERGER AGREEMENT. A DESCRIPTION OF ANY INTERESTS, DIRECT OR
INDIRECT, THAT EPITOPE'S DIRECTORS AND EXECUTIVE OFFICERS HAVE IN THE MERGER
WILL BE INCLUDED IN THE PROXY STATEMENT/PROSPECTUS.
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