High-Premium Biotech M&A Continues (AMGN, CELG, MITI, IBB)

Thursday brought yet more merger and acquisition news in the ongoing buyout trends in the biotech sector.  Amgen Inc. (NASDAQ: AMGN) announced that it is going to acquire Micromet, Inc. (NASDAQ: MITI), a cancer drug maker that is German and American.  Celgene Corporation (NASDAQ: CELG) announced that it was going to acquire an outfit called Avila Therapeutics, a developer of cancer drugs.

The Micromet deal is valued at $11.00 per share.  This was a 33% premium to the prior close and shares closed up 32% at $10.94.  The prior 52-week range was $4.13 to $8.90.  Unfortunately for M&A arbitrage players, this deal offers no real upside in an arb-spread and it seems unlikely that a higher bid is coming based upon its share price never having gone above $11.00 today.  That buyout is on the heels of a deal signed last year where Amgen agreed to an upfront payment for a discovery and development deal.  Amgen is indicated around $69 after turning in 3% sales growth after the close.

Avila Therapeutics is a developer of covalent drugs in cancer and this $925 million buyout from Celgene is a cash and stock deal with $350 million of the total coming in cash.  This company has AVL-292 as a inhibitor now in Phase I studies.  Celgene shares are around $72.65 and are also with striking distance of a 52-week high ($75.11).

It is interesting that with two deals already having been announced in the last 24-hours that the iShares Nasdaq Biotechnology (NASDAQ: IBB) ETF was down by almost 1% at $114.71 on a day when there were two deals on the heels of another large premium acquisition this week.

JON C. OGG