Pfizer's (NYS: PFE) $56 million offer to acquire Icagen (NAS: ICGN) followed a mostly fruitless courtship dating back five years that ultimately saw the pharma giant beat out two others who vied for all or part of the pain drug company.

Pfizer's offer, which amounts to $6 per share, is now under challenge by some shareholders as inadequate. But Icagen's years-long search for an acquirer had proven unsuccessful until this spring when drug partner Pfizer finally reached out to gauge the Durham, North Carolina company's interest in a pharmaceutical M&A deal. Details of events leading up to the July 20 announcement of Icagen's acquisition by the largest pharmaceutical company in the world were disclosed in recently released regulatory filings.

Icagen's relationship with Pfizer dates to 2007, when the companies entered a partnership to develop Icagen's technology into new drug candidates to treat pain. The deal provided Icagen with R&D funds; the company's lead compound is being developed as a treatment for epilepsy and pain. Under the collaboration agreement, Icagen stood to gain up to $360 million in development and regulatory milestones if Pfizer could commercialize a new drug. While the compound has made progress, those milestones remain years away. In 2008, Icagen hired J.P. Morgan to contact potential acquirers.

Pfizer was among the firms J.P. Morgan contacted. But no one, including Pfizer, expressed interest in buying Icagen in 2008. An expanded 2009 search also turned up no offers. Pfizer had spurned Icagen's discussions of an acquisition four times -- once prior to the collaboration deal and three times since then. By summer of last year, eight firms expressed some interest in talks but nothing formal emerged. Last August, Icagen's board determined there was insufficient interest for a competitive process.

With the Pfizer-Icagen collaboration deal set to expire at the end of 2011, it was Pfizer who reached out to its partner in April to discuss a possible acquisition. Pfizer proposed a price between $4 and $5 per share. At the time, Icagen's stock traded at $2.44. Icagen was interested and talks continued. But Icagen's board felt the price was adequate.

On June 1, Pfizer said it would go up to $6 per share in an all-cash deal valued at $56 million. J.P. Morgan then contacted five companies, unnamed in the securities filings, to gauge their interest in acquiring Icagen. Just two responded with offers. One proposed a stock for stock merger at a small premium to Icagen's stock price. The second expressed interest in acquiring only one Icagen drug program. Icagen's board concluded that Pfizer's offer was the best available.

On June 24, Pfizer filed securities documents disclosing its acquisition discussions with Icagen. Before that filing, Icagen stock traded at $2.40. In weeks after Pfizer's filing, Icagen stock skyrocketed to $6 per share and beyond. At its July 19 peak, Icagen stock closed at $7.75 per share.

Icagen shareholders Merlin Nexus and New Leaf Venture Partners sent a July 28 letter to Icagen's board opposing the sale price, saying that Pfizer's offer "undervalues Icagen's assets and is not in the best interests of all stockholders." The firms said they won't tender their Icagen shares under the current terms and they will contact other shareholders to express their concerns. In a letter to stockholders filed with regulators on Aug. 4, Icagen states that Pfizer's offer is "fair and in the best interests of Icagen and its stockholders."

Icagen released second quarter 2011 financial results today. The company has cash and cash equivalents totaling $13.9 million. Preparations are under way for a phase 2 clinical trial studying its lead compound in epilepsy patients. But Icagen said it won't start that trial until the acquisition by Pfizer is complete.

"We are working toward the completion of this transaction, which we expect will be accomplished before the end of the year," CEO Kay Wagoner said in a prepared statement.

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