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.