Celgene (Warren, NJ), a developer of chirally pure drugs, agreed on June 30 to purchase gene-regulation firm Signal Pharmaceuticals (San Diego, CA) for $200 million in an all-stock deal. Both companies are working on drugs to treat cancer and inflammation, but Celgene has successfully exploited commercial applications of a pre-existing drug (thalidomide), while Signal has several drugs in the pipeline but none producing revenue. “It's a good match for Celgene,” says Caroline Copithorne, biotechnology analyst at Morgan Stanley Dean Witter (San Francisco), “They haven't had a basic science drug-discovery engine, which is what Signal brings to the table.”

Celgene shares, 3.7 million of which will be issued to Signal's owners, rose $5.37 to $58.87 on the day of the announcement.

Signal, which last year lost $7.9 million on revenues of $11.9 million, had hoped to raise $80.5 million through an initial public offering earlier this year, but decided to withdraw because of the dip in biotech stock prices.