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Amgen, Celgene, Roche Deals Signal M&A Frenzy for Drug Companies


Cancer, hepatitis and personalized medicine are the focus of recently announced takeovers. More M&A transactions are likely.

Not even a full month into the new year, it's already apparent that 2012 is going to be a busy one for mergers and acquisitions among drug and biotechnology companies.

Two of those deals were announced today. Biotech giant Amgen (AMGN) said it will buy cancer drug developer Micromet (MITI) for about $1.2 billion. Meanwhile, Celgene (CELG) says it will acquire its own oncology specialist, closely held Avila Therapeutics, for $350 million. (Celgene agreed to pay up to $575 million more if certain milestones are achieved.) Both deals will be paid in cash.

The announcements follow this week's news that Swiss drug maker Roche is waging a hostile takeover of gene-sequencing company Illumina (ILMN) for $5.7 billion in cash. Earlier this month, Bristol-Myers Squibb (BMY) agreed to buy hepatitis C drug developer Inhibitex (INHX) for $2.5 billion. (See Bristol-Myers Enters Hepatitis Drug Race With $2.5 Billion Takeover of Inhibitex.) At least half a dozen companies considered buying the biotech. (See Inhibitex Auction Shows Battle for Hepatitis Drugs.)

What all these transactions illustrate is a sense of desperation as companies lack the internal programs to spur future growth. The recent deal announcements highlight key areas that both big biotech and pharmaceutical companies view as the greatest opportunities. Each company being acquired is a symbol of some of the hottest areas of drug discovery -- personalized medicine (Illumina), cancer (Micromet and Avila) and other unmet medical needs (Inhibitex).

Hepatitis C is a particularly attractive area for big companies vying for the next-generation of medicines as a few million Americans and an estimated 170 million people worldwide are believed to have chronic cases of the liver-wasting virus. Gilead Sciences (GILD) just recently closed its $11 billion takeover of hepatitis drug developer Pharmasset, a cash deal that turned heads with its 90% premium. (Bristol-Myers is paying a 163% premium for Inhibitex.)

While not nearly as frothy as the Inhibitex or Pharmasset deals, Micromet's $11 a share takeover represents a 33% premium over that company's closing stock price Wednesday. The deal also is a reminder that cancer continues to be a very key focus for biotech research.

"With more than one third of the 900-plus compounds in the clinic targeting cancer and related diseases, we expect oncology to remain in focus with regard to M&A as evidenced to date with Amgen and Celgene's transactions," says biotechnology industry consultant Michael Becker.

Micromet uses a proprietary antibody technology that spurs the body's T cells to detect and destroy cancer cells. The company is in the early to middle stages of clinical testing for blood cancers and is conducting early testing in other areas.

Becker says he believes companies testing so-called immunotherapies -- drugs that trigger a person's immune system to fight disease -- will be particularly attractive to some potential buyers this year.

Twitter: @brettchase

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