UPDATE 1-AstraZeneca in talks to buy UK biotech firm CAT
Sun May 14, 2006 9:22 AM ET
(Adds source comments, background)
LONDON, May 14 (Reuters) - AstraZeneca Plc (AZN.L: Quote, Profile, Research) is in talks to buy Britain's biggest biotechnology company, Cambridge Antibody Technology Group Plc (CAT.L: Quote, Profile, Research), in its latest move to restock a depleted development pipeline for new drugs.
Both AstraZeneca and Cambridge Antibody Technology (CAT) confirmed the talks on Sunday, though neither would comment on a report in The Sunday Times newspaper which said the deal would value CAT at about 600 million pounds ($1.13 billion). That would be a premium of over 40 percent to CAT's closing share price on Friday.
Shares in CAT, which provided technology used in Abbott Laboratories (ABT.N: Quote, Profile, Research) blockbuster arthritis drug Humira, closed at 791 pence on Friday, valuing it at about 420 million pounds.
AstraZeneca shares closed at 28.57 pounds, giving a market value of about 45 billion pounds.
But industry sources said Europe's third-biggest drugmaker would have to pay up for CAT's cutting-edge technology.
CAT specialises in making drugs from antibodies, the body's natural immune defences, which generally have fewer side-effects than conventional chemistry-based medicines.
Major pharmaceutical firms are battling to strengthen their ability to make so-called biological drugs. AstraZeneca already had a research partnership with CAT dating from November 2004, which followed a similar deal with U.S. antibody group Abgenix.
Industry sources said AstraZeneca's decision to pursue an acquisition showed the partnership with CAT, which saw the Anglo-Swedish drugmaker taking a 20 percent stake in CAT, was making good progress.
By buying CAT AstraZeneca would not have to share the profits of any drugs resulting from the collaboration.
AstraZeneca is working hard to boost its pipeline of new drugs after a series of failures in late stage clinical trials, including Exanta for blood clots and Iressa for cancer in 2004, and more recently Galida for diabetes.
In recent months the firm has signed deals potentially worth around $2 billion to bring in new medicines and new Chief Executive David Brennan has said he is looking for more deals.
However, the earliest any of CAT and AstraZeneca's joint research projects are expected to start clinical trials is 2007, putting any marketable product several years away.
Industry sources said AstraZeneca and CAT would be looking to announce a deal as soon as possible.
CAT would be the latest in a long line of promising British biotechnology firms to be snapped up by large pharmaceutical companies, with Belgium's UCB (UCBBt.BR: Quote, Profile, Research) buying Celltech in 2004 and U.S. group Chiron acquiring PowderJect in the same year. (Additional reporting by Ben Hirschler) |
