AstraZeneca Is Buying Biopharma Company

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

Under the offer, AstraZeneca will pay just under $25 per share, or about $1.1 billion, for all outstanding shares of CAT. That is a 70% premium on the closing price of CAT’s shares on the London Stock Exchange at the end of last week. CAT’s directors say the offer is fair and reasonable, and they unanimously recommend acceptance.

AstraZeneca says it intends to create a major R&D capability to deliver biological therapeutics and that the purchase of CAT is “central to these plans.” 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, says CEO David Brennan, AstraZeneca 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 formed an alliance in 2004 to discover and develop human antibody therapeutics, principally to treat inflammatory disorders. That agreement included AstraZeneca’s initial investment in CAT.

In addition to its biopharmaceutical expertise, CAT, which was founded in 1996 and had sales of $88 million in its most recent fiscal year, brings AstraZeneca a royalty stream from sales of Humira, an antibody-based treatment for arthritis. The molecule was isolated and optimized in collaboration with Abbott Laboratories, which reported $1.4 billion in Humira sales last year.

In addition, six other CAT-derived human monoclonal antibodies are in various stages of development by Abbott, Wyeth, and Human Genome Sciences. And CAT has licensed its technology and patents to other companies including Amgen, Chugai, Genzyme, Merck & Co., and Pfizer.

CAT recently acquired two oncology drug candidates from Genencor. It also has established a U.S. base in Palo Alto, Calif.