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Celgene, Pharmion, Genentech & Onyx: A Biotech "Frenzy"

For a Monday before the Thanksgiving holiday, this is turning into an extremely busy day on the biotech beat. Two of the stories actually broke on Sunday: Celgene buying Pharmion for nearly $3 billion and Genentech announcing a breakthrough in brain cancer. Then, before the opening bell this morning Onyx Pharmaceuticals and Bayer won the expected Food and Drug Administration approval of their drug Nexavar for liver cancer.

Celgene and Pharmion both play in the blood cancer space. Many expected CELG to be bought, not to be a buyer. Of course, it could still get taken out, but it'll cost a bigger biotech or a big pharma a pretty penny with a market value of $25 billion. But, for now, Celgene is going its own way paying a nearly 50% premium to last Friday's closing price for PHRM in cash and stock.

I'm simply making an observation, but PHRM shares went up 5% last Friday and another buck in after-hours trading. Miller Tabak Healthcare Analyst Les Funtleyder writes in a research note to clients this morning that we've seen two deals in as many business days (Pfizer announced it's buying Coley Pharmaceuticals on Friday) and he adds, "Biotech and pharma have traditionally done deals in the fourth quarter, as there is an incentive to close deals by year end due to the often-available space in the budget and concerns about forward year growth becoming more tangible." Funtleyder expects to see more deals done involving "very early stage IP (intellectual property)…or early stage revenue programs like Abgenix (which Amgen bought in Q4 last year) and PHRM (being) the likely templates for deals in the next few weeks."

You can hear more about the latest deal in our exclusive interview with Celgene's Chairman, CEO and Founder Sol Barer in the video clip from "Squawk Box" this morning.

In the evolving "Avastin for everything" story, Genentech says its drug for colon and lung cancer also appears to work well on the most common and aggressive form of brain cancer. Preliminary results from a mid-stage test show it kept the tumors in check for as long as six months.

The company says there hasn't been a change in the length of survival for these patients in 25 years. Rodman & Renshaw's Mike King writes in a research note to clients this morning that if DNA wins FDA approval of Avastin for brain cancer that it could add more than $700 million in annual revenue. R & R wants to bank Genentech.

And finally, ONXX and BAYsay the FDA has okayed its kidney cancer drug, Nexavar, for liver cancer. Early this year Onyx shares skyrocketed when they announced the positive clinical trial results showing Nexavar extended some patients' lives by nearly three months. That's why you're not seeing ONXX shares move much in early trading. Nonetheless, at a time when the FDA has come under criticism for delaying cancer drug approvals and developmental drug progress, this is yet another step forward.

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