AstraZeneca buys CAT in £702m swoop
The deal – believed to be a record for an all-British biotech transaction – will trigger massive growth at the Cambridge company as AstraZeneca intends to make CAT “central to our plans to establish a major international presence in the R & D of biological therapeutics.”
CAT – Business Weekly’s reigning Business of the Year – has agreed to an offer of 13.20p a share – almost double the recent trading price and a 70 per cent premium on Friday’s closing price.
Weekend speculation that the deal was about to break sent the stock soaring almost 63 per cent to 1286p – a rise of 495p.
CAT chief executive Peter Chambre told Business Weekly: “This is a fantastic success for UK biotech, for Cambridge Antibody Technology and its shareholders, for patients – and for Cambridge.
“AstraZeneca will invest in Cambridge and CAT will grow its business from Cambridge. It’s AstraZeneca’s call on any new buildings that will be required, but right now we are full with 300 people.
“I am enormously proud of what CAT has achieved. Building our portfolio has paid handsome dividends. The company has invested in science for 16 years and never been diverted along the way.”
Chambre will leave his role as CEO to make way for a new chief executive from within AstraZeneca and said: “That’s entirely right; I will help with the changeover but after that I will be taking up a new challenge. I’m too young to hang up my boots just yet.”
The CAT name survives, said Chambre, who also revealed the backdrop to the deal. CAT and AstraZeneca signed a strategic development alliance in 2004, jointly committing to spend at least £100m on 25 drug discovery projects, focusing on respiratory disease and other inflammatory disorders.
Chambre said: “The alliance has gone fantastically well; the science of the two companies has been an outstanding fit and our respective people have worked brilliantly together. Between us we have beaten every target we set.
“Because of this, AstraZeneca approached us and said things had gone so well they wanted to extend and expand the alliance. Over the last two weeks talks have progressed and this deal is the result.
“The combination of our respective science will certainly be good news for patients. We have an incredibly broad base of technology. A company of our size before this deal would not have been able to commercialise the whole portfolio – but AstraZeneca has the resources to do so. I’m also excited for the Cambridge biotech cluster of which we are proud to be part. AstraZeneca’s investment here will be huge.”
Chambre also praised Business Weekly’s foresight in naming CAT as business of the year in the East of England Business Awards in February when many were tipping CSR. “We were proud to win your Award and your judgement is certainly looking pretty good right now.”
AstraZeneca chief executive David Brennan added: “We expect that by 2010, up to a quarter of our candidates for full scale development will be biological therapeutic agents. We will combine our own biologicals research operations with CAT’s and provide further investment to accelerate our development of both monoclonal antibodies and novel biological entities.
“CAT will become central to AstraZeneca’s plans to establish a major international presence in the research and development of biological therapeutics.
“The biologicals drive will be led from CAT’s Cambridge headquarters, developing CAT’s technology across a number of therapeutic areas including respiratory & inflammation, oncology & infection, neuroscience, cardiovascular and gastro-intestinal.”
AstraZeneca already owns 19.2 per cent of CAT, so the outlay for the shares it does not already own will total around £567m and will be met in cash.
CAT has an impressive war chest of its own. It had a balance of net cash and liquid resources of £152m at the end of December. The Cambridge firm last year became the first UK company to develop a blockbuster drug – one with sales of more than $1 billion – with HUMIRA.
CAT will provide AstraZeneca with a royalty stream on the sales of HUMIRA, the human monoclonal antibody medicine approved for rheumatoid arthritis, which is licensed to US drugs company Abbott Laboratories.
CAT will also provide potential milestone revenues and royalties on its other licensed products. In addition it will provide access to its development pipeline, including CAT-3888 in Phase II trials for lymphoma and CAT-354 in Phase I for asthma.
This deal is AstraZeneca’s second swoop for Cambridge science in less than five months: In January, it paid £122m for cancer specialist KuDOS Pharmaceuticals and reaffirmed to Business Weekly that this would lay the foundations for a global oncology research hub to be developed in Cambridge.