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Amylin, Ardea Biosciences Show Brisk Pace for Biotech Drug Deals

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AstraZeneca plans to buy Ardea, and Amylin shops itself just days after Human Genome turns down an unsolicited bid from Glaxo.

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The pace of biotech drug takeovers is picking up again after a burst of deals earlier this year.

Big UK drugmaker AstraZeneca (AZN) agreed to pay about $1.26 billion, or $32 per share, in cash to take over Ardea Biosciences (RDEA) of San Diego. AstraZeneca would gain an experimental gout drug that is in the late stages of development. Ardea also licensed an experimental cancer treatment to Bayer. The price represents a more than 50% premium to Ardea's closing stock price Friday.

Meanwhile, shares of Amylin Pharmaceuticals (AMLN) jumped 10% midday Monday after a weekend report that the diabetes drug maker hired advisers and put itself up for sale. Reuters names AstraZeneca, Merck (MRK), and Takeda Pharmaceutical as potential bidders. Amylin's stock jumped by two-thirds since late March when it reportedly turned down a $3.5 billion buyout offer from Bristol-Myers Squibb (BMY).

Amylin never confirmed the Bristol-Myers overture, and activist investor Carl Icahn is trying to force the company to open its books. Icahn also sued Amylin, asking a Delaware court to make the company extend a deadline for board nominees. Amylin traded at $25.15 Monday.

The planned takeover of Ardea and the latest development around Amylin follows GlaxoSmithKline's (GSK) unsolicited bid for Human Genome Sciences (HGSI), which was made public last week. (See Human Genome Sciences Rejects GlaxoSmithKline's $2.6 Billion Takeover Offer.)

The largest US and European drug makers are looking to build their portfolios of newly approved and experimental drugs after failing to develop new products in their own labs.

Takeda, a large Japanese company, is looking to expand its US operations. The company recently announced an $800 million deal to buy closely held URL Pharma (another gout drug maker).

As the big drug companies look to expand their lineup of new drugs, they're also taking a harder look at their own operations. Pfizer (PFE) said today that it will sell its baby food business to Nestle for almost $12 billion in cash. While Pfizer signaled that it will use proceeds to buy back shares and increase its dividend, the company is much more focused on its pharmaceutical business and has resources to easily pick up small and mid-sized drug makers.

As for potential sellers, a number of companies will be on the radar screens of big pharma. With a $1.4 billion market cap, Amarin (AMRN) may be a logical takeover for AstraZeneca or another large drug company, Leerink Swann analyst Joseph Schwartz says in a note today.

Schwartz suggests Ardea shareholders take their profit and invest in Amarin, which has a promising cholesterol treatment in the late stages of development.

The recent takeover activity follows a busy start to the year when Bristol-Myers announced the takeover of hepatitis C drug developer Inhibitex on the heels of Gilead Sciences' (GILD) bid for Pharmasset in late 2011. Both transactions have since closed.

Other deals were announced in January, including acquisitions by Amgen (AMGN) and Celgene (CELG). Not every big company has absolute leverage for acquisitions, however. Last week, the big Swiss company Roche scrapped plans to take over gene-sequencing specialist Illumina (ILMN) for almost $7 billion. Roche couldn't convince Illumina's shareholders to accept the offer.

Twitter: @brettchase

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No positions in stocks mentioned.
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