What's A Better Buyout: Ardea or Amylin? (RDEA, AMLN, AZN, BMY, MRK)

Ardea Biosciences, Inc. (NASDAQ: RDEA) is soaring today on news that AstraZeneca PLC (NYSE: AZN) is paying about $1.26 billion to acquire the company.  With another small-cap to mid-cap biotech and emerging pharma company being gobbled up by Big Pharma, and with Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) up over 10% on more talk of a possible sale, we want to ask one simple yet complex question: Is Ardea a better acquisition that Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN)?

Ardea Biosciences, Inc. (NASDAQ: RDEA) is now worth about $1.2 billion and the stock’s prior 52-week high had been $29.06. Now shares are up at $31.58 and AstraZeneca buys a gout and cancer pipeline here.  The problem is that no one is expecting big earnings nor even big sales any time soon.  Thomson Reuters has estimates of -$3.64 EPS on only $13.4 million in revenue in 2012 and -$1.89 EPS on almost $56 million in 2013.  Ardea has just over 100 employees and its pipeline includes two gout treatments and two cancer treatments (one for pancreatic cancer and one for primary liver cancer.

Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) now has a $3.8 billion market capitalization rate.  With a fresh new diabetes drug approval and with prior speculation of a super-premium buyout, this one already has a lot of premium built in.  Shares went from about $11 to more than $17 early in 2012 and then from about $16 to over $24 over the last month before settling down around $23 of late.  Now there is talk that it has several interested bidders.  Amylin’s ongoing pipeline is concentrated around diabetes and obesity but its main products are BYDUREON and BYETTA.  Amylin is also expected to lose money in 2012 and in 2013, but its sales were $650 million in 2011 and are expected to rise to $688.4 million in 2012 and $852.9 million in 2013.

Bristol-Myers Squibb Company (NYSE: BMY) reportedly made a bid for Amylin already, and newer reports have Merck & Co. Inc. (NYSE: MRK), AstraZeneca PLC (NYSE: AZN), and Takeda all lined up as would-be potential acquirers.

It is very difficult to get an apples to apples comparison here when you consider that one company is in the development and clinical stage and the other is already in the product commercialization stage.  Ardea is of course a much larger unknown that Amylin.  Its price and market capitalization also reflect this.

JON C. OGG