Healthcare Starts 2012 With a Flurry of Acquisitions

Joel Anderson  |

The last month was a wild one for the Healthcare sector as a series of mergers and acquisitions have dominated the news. A number of smaller healthcare companies were bought up by larger rivals looking to add valuable brands and potential new drugs to their portfolios.

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Amgen (AMGN), the independent biotech giant, agreed on Thursday to purchase cancer-drug developer Micromet (MITI) for $1.16 billion. This would represent a price of $11 per share for Micromet, a 33-percent premium on Micromet's price at market close on Wednesday. At the heart of the deal was blinatumomab, an antibody that Micromet currently has in phase-2 clinical trials. The antibody is being created to treat acute lymphoblastic leukemia and is in trials for treating non-Hodgkins Lymphoma.

"We believe that this transaction represents an attractive opportunity for Micromet, its stockholders and cancer patients," said Micromet CEO Christian Itin. "Amgen's extensive resources and experience in the development and commercialization of biologics promise to speed blinatumomab's path to market, expand its development across a broader range of B-cell malignancies and maximize the full potential of our novel BiTE technology."

Celgene Catching Their Own Company

Celgene (CELG) also announced an acquisition on Thursday, snapping up its own oncology specialist in Avila Therapeutics. Celgene is reportedly paying $350 million in the deal with up to $195 million more to be paid should Avila reach certain benchmarks with their experimental blood-cancer therapy, AVL-292. Should the treatment receive regulatory approval, Avila's shareholders will be be even happier.

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“Avila Therapeutics is a remarkable company that is aligned with our commitment to improve the lives of patients worldwide through innovative science and disease-altering therapies,” said Tom Daniel, M.D., President of Research and Early Development for Celgene Corp. “In particular, we see Avila’s unique approach to protein silencing as an area of great promise for our research initiatives in hematology, oncology and immune-inflammatory diseases.”

Roche's True Intentions Illuminated

While Celgene and Amgen made their new acquisitions with approval of the companies being acquired, Swiss company Roche (RHHBY) is attempting a hostile takeover of gene sequencer Illumina (ILMN). Roche has given shareholders in Ilumina until midnight on February 24th to accept an offer of $44.50 a share, valuing the company at $5.7 billion. However, investors clearly seem to think that Roche is ready to go higher as share prices in Ilumina have since jumped well over $51 a share.

Other Major Deals in Biotech

This busy month of deals was kicked off early in 2012 when Bristol Myers Squibb (BMY) announced plans to purchase hepatitis-C drug maker Inhibitex (INHX) for some $26 a share, representing an over 160-percent premium. The move displayed the growing market for hepatitis-C treatments, a disease that affects as many as 170 million people worldwide. This sort of premium was massive, dwarfing even the 90-percent premium paid in November of last year by Gilead Sciences (GILD) when it acquired Pharmasset (VRUS). However, a recent disclosure by Inhibitex revealed precisely why Bristol Myers was willing to go so high: there were five other interested buyers bidding for the company.

“The revelation that there were six parties looking at Inhibitex could intensify investor speculation that consolidation in the (hepatitis C) space could continue,” ISI Group analyst Mark Schoenebaum says.

On the whole, the flurry of acquisitions represents efforts by larger companies to extend their profitability by obtaining potentially lucrative brands and drugs before they hit the market. Often with limited prospects internally, obtaining new properties can be one of the only ways to continue competing.

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