GO
Loading...

Major Wave of Biotech Mergers Expected

Amgen and Celgene , looking to boost oncology offerings, announced separate deals for small biotech companies Thursday, the latest in what analysts expect to be a major wave of biotech mergers.

Tom Grill | Getty Images

Amgen is buying Micromet for $1.16 billion at a 33 percent premium to its market price.

Micromet has several cancer drugs in development, including a specific compound for leukemia that the company has in a late-stage trial. Analysts say this is a worthwhile acquisition for Amgen as the biotech firm has been looking for ways to strengthen its position in oncology.

There have been four biotech deals already this year. Analysts expect the merger wave to continue and to specifically target companies with phase II or III drugs in the pipeline. They are of special interest to the bigger pharmaceutical companies, which have strong cash flow but not much in their own research pipelines and older drugs coming off patent.

Some companies that the street has identified as possible acquisition targets include Idenix Pharmaceuticals , BioMarin Pharmaceuticals , Pharmacyclics and Achillion Pharmaceuticals . All of these smaller biotech names have promising drugs in trial that could yield high profitability.

Also Thursday, Celgene announced the acquisition of a privately-held biotech company, Avila Therapeutics for $925 million. This acquisition will give Celgene the ability to expand its role in the hematologic cancer and therapeutics space. Avila Therapeutics specializes in hematology drugs and has a Phase I drug that is designed to treat blood cancers, similar to Celgene’s Revlimid drug.

The acquisition should be closed by March of 2012.

The deals follow Wednesday’s hostile bid by Roche for Illumina , a leader in DNA mapping. Takeover speculation now surrounds its competitor, Life Technologies , which is rumored to be the next target in the genomics space.

At J.P. Morgan Health Care conference, Life Technologies announced that it is launching a new genome mapping device that will offer readings for $1,000, a sharp discount from the current price for sequencing DNA.

Genomics is expected to play a larger role in customized health care, thus the reason we’re seeing large pharmaceutical firms invest in this hot space.

Questions? Comments? Email us at marketinsider@cnbc.com

Symbol
Price
 
Change
%Change
1600
---
AMGN
---
BMRN
---
CELG
---
IDIX
---
ILMN
---
JPM MLP ETN
---
IVN
---
PCYC
---

Featured

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC Senior Commodities Correspondent and Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.