Drugmaker Buys Key Biotech Firm

Drugmaker AstraZeneca has agreed to acquire Cambridge Antibody Technology Group (CAT) in a deal that values the British biotech company at roughly $1.3 billion. AstraZeneca already owns 19.2% of CAT.

According to the offer, AstraZeneca will pay just under $25 per share, or about $1.1 billion, for all outstanding shares of CAT. The purchase price represents a 70% premium on the closing price of CAT's shares on the London Stock Exchange on May 12, the last business day before the deal was announced. CAT's directors say the offer is fair and reasonable, and they recommend acceptance.

AstraZeneca says the purchase is central to its plans to create a major R&D capability in biological therapeutics. The new biotech organization will be led from CAT's headquarters in Cambridge, England, and will be distinct from AstraZeneca's small-molecule research operations.

In fact, AstraZeneca CEO David R. Brennan says, the company is looking for more deals in the biopharma sphere. "It is our intention to both expand and broaden the scope of our discovery and development pipeline, and we expect that, by 2010, up to a quarter of our candidates for full-scale development will be biological therapeutic agents," he says.

AstraZeneca and CAT linked up in 2004 in an alliance to discover human antibody therapeutics, principally to treat inflammatory disorders. CAT is perhaps best known for working with Abbott Laboratories to develop the blockbuster antibody Humira for arthritis treatment.

The deal exemplifies a larger trend for major pharma companies to expand their biologics pipelines through acquisitions rather than in-licensing, says Simon King, an analyst with the market research firm Datamonitor. Another recent example is Merck's purchase of GlycoFi and Abmaxis (C&EN, May 15, page 10). The industry is likely to see more of these deals going forward, King says, because sales growth of biologics is expected to exceed that of small molecules over the next five to six years.