AstraZeneca acquires Cambridge Antibody
AstraZeneca closed the deal on Cambridge Antibody, a biotech firm whose primary product is Humira, a human monoclonal. AZ will dish out some $1.07 billion for the rest of the 80% of the shares it did not already own. This breaks down to some $24.98 per share — a 67% premium over Cambridge's Friday closing price(!). This works out to 14x more than Cambridge has made in sales. The biotech has yet to turn in a profitable quarter — how I hate that phrase's implications! — but their losses have been decreasing with time.
I suspect that sales will increase markedly over the next 12 months; Humira is a relative newcomer on the market, and it is showing some efficacy in treating a number of autoimmune disorders: Crohn's disease, rheumatoid arthritis, and severe psoriasis among them. (Humira is currently only approved for certain forms of arthritis, though doctors are using it for off-label purposes.) Due to its steep cost, insurers are often reluctant to pay for it, though arms can usually be twisted in the form of a prior authorization if nothing else has worked.
I think the Fool is probably right when they suggest that AstraZeneca's acquisition is a copycat move — biotech firms are finally starting to turn out some real, marketable products, and AstraZeneca and the other big pharmaceutical manufacturers don't want to be left behind when the gravy train finally takes off. Unfortunately for AstraZeneca, Cambridge's pipeline is not as rich as it might have been: they recently pulled what might have been their next blockbuster after it failed to show efficacy in Phase 3 trials. Bringing a drug through Phase 3 trials is hugely expensive, and having it fail is a big loss for Cambridge. The next drug in the pipeline — a leukemia treatment — is currently in Phase 2 trials.
[tags]AstraZeneca, Cambridge Antibody, Mergers & Acquisitions, Humira[/tags]
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