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Exhibit 99.1
[Letterhead of Merrill Lynch & Co]
Investment Banking Group
World Financial Center
North Tower
New York, New York 10281-1328
212 449 8296
FAX 212 449 3145
FAX 212 449 3150
[Logo] , 1998
Board of Directors
BioChem Pharma Inc.
275 Armand-Frappier Blvd.
Laval, Quebec
Canada H7V 4A7
Ladies and Gentlemen:
You have advised us that BioChem Pharma Inc. ("BioChem") intends to
distribute (the "Distribution") to its shareholders Class A Common Shares (the
"CliniChem Shares") of CliniChem Development Inc. ("CliniChem"). The
Distribution is described in detail in the prospectus (the "Prospectus"), filed
as part of a registration statement file no. 333-45871, which is to be sent
to BioChem shareholders in connection with the Distribution. You have asked us
for our opinion as to whether or not (a) from a financial point of view, the
Distribution provides a reasonable structure to pursue the financial objectives
of BioChem as set forth in the Prospectus, and (b) from a financial point of
view, the Distribution is fair to the shareholders of BioChem.
In arriving at the opinion set forth below, we have, among other things:
1. reviewed the Prospectus including the following items as presented
therein: (i) the terms and conditions of the Distribution, (ii) the
Distribution Agreement, (iii) the Technology License Agreement, (iv) the
Research and Development Agreement, (v) the Product Option Agreement and
(vi) the Articles of Incorporation of CliniChem including the Purchase
Option;
2. conducted discussions with members of the senior management of BioChem
with respect to the businesses and prospects of BioChem and CliniChem and
the strategic objectives of each;
3. conducted discussions concerning the Distribution with other
representatives and advisors of BioChem, including its independent
chartered accountants;
4. reviewed the financial and other information concerning BioChem (with
and without CliniChem) that was publicly available or furnished to us by
BioChem, including information provided during discussions with the senior
management of BioChem;
5. reviewed historical trading prices and volume of the Common Shares of
BioChem ("BioChem
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Common Shares"); and
6. reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our assessment of
general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available (including the
information contained in the Prospectus), and we have not assumed any
responsibility for independently verifying such information or undertaken an
independent evaluation or appraisal of any of the assets or liabilities of
BioChem (with or without CliniChem) or been furnished with any such evaluation
or appraisal. In addition, we have not assumed any obligation to conduct, nor
have we conducted, any physical inspection of the properties or facilities of
BioChem. With respect to the financial forecast information furnished to or
discussed with us by BioChem, we have assumed it has been reasonably prepared
and reflects the best currently available estimates and judgment of BioChem's
management as to the expected future financial performance of BioChem and
CliniChem.
We have also assumed that: (i) the Distribution will occur as described in
the Prospectus, and (ii) after the Distribution, CliniChem will be accounted for
as an entity independent of BioChem.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof. We note that trading in the BioChem Common Shares and
the CliniChem Shares for a period following completion of the Distribution may
be characterized by a redistribution of the shares of the BioChem Common Shares
and the CliniChem Shares among existing BioChem shareholders and other investors
and, accordingly, during such period, the BioChem Common Shares and the
CliniChem Shares may trade at prices below those at which they would trade on a
fully distributed basis. We are not expressing any opinion herein as to the
price at which the BioChem Common Shares will actually trade after the
announcement date of the Distribution or the price at which the CliniChem Shares
will actually trade after the Distribution. In addition, this opinion does not
address the valuation or future performance of CliniChem as an independent
public company following the Distribution. We express no opinion as to whether
the funds contributed by BioChem to CliniChem will be adequate to accomplish the
objective of successfully developing the intended pharmaceutical products.
We are acting as financial advisor to BioChem in connection with the
Distribution and will receive a fee for our services, which fee is contingent
upon the consummation of the Distribution. In addition, BioChem has agreed to
indemnify us for certain liabilities arising out of our engagement. We may
continue to provide financial advisory or financing services to BioChem and may
receive fees for the rendering of such services. In addition, in the ordinary
course of our business, we may actively trade BioChem Common Shares, and we may,
in the future, trade CliniChem Shares for our own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of
BioChem.
On the basis of and subject to the foregoing, as of the date hereof, it is
our opinion that (a) from a financial point of view, the Distribution provides a
reasonable structure to pursue the financial objectives of BioChem as set forth
in the Prospectus, and (b) from a financial point of view, the Distribution is
fair to the shareholders of BioChem. Our conclusions are based on information
available to us as of the date of this letter.
Very truly yours,