Guilford Pharmaceuticals Inc. has entered into a definitive merger agreement with ProQuest Pharmaceuticals, Inc., a privately held biopharmaceutical company based in Lawrence, Kansas, under which Guilford will acquire ProQuest for approximately $7.0 million in Guilford common stock. In exchange, Guilford will obtain full ownership of the worldwide intellectual property rights to Aquavan Injection, a novel sedative/hypnotic currently in Phase III clinical testing.

The ProQuest acquisition supersedes a technology license agreement signed between the two companies in March 2000, under which Guilford obtained worldwide development and commercialization rights for Aquavan in exchange for upfront equity payments to ProQuest and future milestone and royalty payments payable upon the commercialization of Aquavan.

Under the terms of the agreement, which have been approved by the boards of directors of both companies, shareholders of ProQuest will receive approximately 1.5 million shares of common stock of Guilford. The actual number of shares of Guilford common stock that ProQuest shareholders will receive is based on the average closing price of Guilford's common stock for the 30-day period prior to two days before the transaction closes, release from Guilford said here.

Dean J. Mitchell, president and CEO of Guilford stated, We expect initially to seek regulatory approval for Aquavan for procedural sedation in brief diagnostic and therapeutic procedures, which represents a large and growing market opportunity. In the United States alone there are currently more than 50 million such procedures requiring sedation each year, a number which is expected to increase as the population ages and advancements in medical technology continue to shift a greater number of procedures into the outpatient setting."

Aquavan Injection is a novel sedation agent that is a proprietary water-soluble prodrug of propofol. Aquavan Injection is rapidly converted by an enzyme in the body called alkaline phosphatase into propofol after intravenous injection. Aquavan Injection is currently in Phase III clinical development.