Abbott, Amgen Are On the Prowl with Small Deals

abbott-amgen-are-on-the-prowl-with-small-dealsAcquisitions and deals are always a risky business, especially in the pharmaceuticals industry. Just today, Elan Corp. (ELN) and Gilead Sciences (GILD) discovered the price of such deals when both halted drug trials on compounds developed by other pharmaceutical firms. Due to safety concerns, Elan partially halted an Alzheimer's drug trial in partnership with Transition Therapeutics Inc. (TTHI). And due to efficacy issues, Gilead halted a trial of a blood pressure drug it bought with its $2.5 billion acquisition of Myogen.
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%
In that light, it's interesting to hear of two new deals today. Amgen Inc. (AMGN) has entered an agreement with Array BioPharma Inc. (ARRY) to develop a potential treatment for type 2 diabetes, while Abbott Laboratories (ABT) agreed to acquire Starlims Technologies Ltd. (LIMS) for about $123 million.

Abbott Buys Into the Information Business

Technically, the Abbott acquisition of Starlims isn't exactly a pharmaceutical deal, as Starlims is a laboratory information management systems developer.

Under the terms of the agreement, Abbott will acquire all outstanding equity in Starlims for $14 per share, for a total purchase price of approximately $123 million. This was quite the premium -- LIMS shares closed at $9.50 on Monday, and surged 45% on news of the buyout. Starlims currently has approximately $18 million in cash on hand.

Abbott said the acquisition strengthens its competitive position in the global diagnostics market, providing advanced web-based applications to help laboratories efficiently store, retrieve and analyze their ever-increasing volume of clinical, managerial and administrative data, and aid them in monitoring their compliance with global regulatory and industry standards.

This isn't Abbott's only acquisition this year. The company has already snatched up a slew of small-to-midsized companies, as well as rights to several compounds. Some of these include: the acquisition of a Phase I chronic pain treatment for $170 million; the acquisition of Evalve, a developer of devices for minimally invasive repair of mitral valves, for at least $320 million; and the acquisition of eye care company Visiogen for $400 million. And those took place in the last three months alone. Abbott's bigger acquisition of Solvay for $6.6 billion in cash expanded its pharmaceutical products portfolio and gave it a significant presence in key global emerging markets.

Amgen Has High Hopes for Diabetes Drugs

Meanwhile, Amgen has entered an agreement with Array BioPharma to develop a potential treatment for type 2 diabetes, the companies announced late Monday. Amgen will pay Array $60 million up front and give Array additional contingent payments for certain clinical and commercial milestones.

In return, Amgen will receive exclusive worldwide rights to Array's small-molecule glucokinase activator program, aimed at developing drugs that activate certain enzymes so that the body can produce more insulin. That program includes the drug compound, ARRY-403, administered orally and in Phase I testing.

"Type 2 diabetes affects over 20 million Americans and its incidence is increasing at an alarming rate," said Roger M. Perlmutter, Amgen's executive vice president of Research and Development in a statement. "Type 2 diabetes has long been an important focus of research for Amgen, and the addition of ARRY-403 clearly strengthens our diabetes pipeline."

This is exactly the kind of deal that may or may not pan out. While it's no doubt a good deal for Array (as is evident by the 28% its stock gained Tuesday) Amgen is down about 1.8%. This small deal obviously doesn't do much to address the many ongoing setbacks the company is facing. However, recently Amgen's bone drug denosumab, upon which it is pinning much of its hope for future growth, has provided encouraging study results.

Read Full Story
  • DJI27901.98-130.40-0.47%
  • NIKKEI 22523360.3040.930.18%
    Hang Seng24455.41114.560.47%
  • USD (PER EUR)1.18-0.0006-0.05%
    USD (PER CHF)1.10-0.0019-0.17%
    JPY (PER USD)104.38-0.3130-0.30%
    GBP (PER USD)1.30-0.0005-0.04%

From Our Partners