BOSTON (AFX) -- Now that Cambridge Antibody Technology Group has been snagged by AstraZeneca, and Amgen has gobbled up Abgenix, will rival Medarex be the next takeover target?
Investors appeared to think so on Monday, bidding shares of the Princeton, N.J.-based antibody developer as high as $12.13. Medarex shares finished the day up 6% at $11.64.
Cambridge Antibody Technology , also known as CAT, Medarex and Abgenix have long been considered a sort of troika in the field of therapeutic monoclonal antibodies development. And with Abgenix, and now apparently CAT, out of the running, analysts see Medarex as the next in line to be scooped up by a major drug company.
Medarex's shares have reflected this. The stock has been on a roll since December, when biotech giant Amgen announced it was buying Medarex's leading U.S. competitor, Abgenix, for $2.2 billion in cash, or $22.50 a share. That deal closed last month.
Early Monday, AstraZeneca said it planned to buy the 80% of CAT that it didn't already own for about $1.3 billion, or $24.98 a share.
'There are a dwindling number of them, and now just one major one, Medarex,' said Janney Montgomery Scott analyst Brian Rye, of the monoclonal antibody developers. Janney served as co-manager of a recent offering for Medarex.
Rye added that although he did not believe Medarex management was actively seeking a deal, they could be willing to sell 'if the price were right.'
'I wouldn't be surprised if Medarex were next, but it would be a trickier buyout because of so partnerships it has,' said Global Crown Capital analyst Kate Winkler, who does not own shares in Medarex, nor does her firm do investment banking. 'You'd have to pay more money.'
Possible bidders for Medarex would likely be one of their major partners. Analysts point out that AstraZeneca already had about a 20% stake in CAT before it bid. And Amgen said it was buying Abgenix to gain full control over a promising antibody the two were developing, panitumumab, for the treatment of cancer.
'Abgenix had a higher profile drug, panitumumab, but historically Medarex has been the company most chosen by Big Pharma to work with,' said Winkler.
Both analysts agreed that Medarex's two biggest development partners, Pfizer and Bristol-Myers Squibb , would be the most likely contenders for Medarex.
Johnson & Johnson , which has partnered with Medarex on two Phase III-stage drug candidates, is third possibility.
According to Rye, Pfizer already holds about a 5% stake in Medarex. The two companies currently have an antibody to treat melanoma in Phase III testing and a broad technology agreement in place.
Further fanning speculation is the fact that Pfizer, the world's largest pharmaceutical company, has announced it is interested in making more acquisitions for its pipeline. In addition, last June, Pfizer announced it was forking out $1.9 billion for European biotech group Vicuron, a developer of anti-infective drugs.
'They've demonstrated that price is not an obstacle,' said Rye, adding he would expect Medarex to garner a price at least as high as Abgenix's, given the strength of its technology.
A second contender could be Bristol-Myers Squibb, which Rye said has partnered with Medarex on another late-stage drug for melanoma. If that drug makes it to market, Bristol-Myers would have to split profits 55% to 45% with Medarex, a prospect that may prompt the Blue Chip to buy the biotech group.
Rye said Bristol-Myers would likely make such a move Phase III data on the drug is released. That data is expected some time in 2007, he said. This story was supplied by MarketWatch. For further information see www.marketwatch.com.