AstraZeneca buys cancer drug firm for $210m

AstraZeneca continued its pre-Christmas shopping spree yesterday with the $210m (£120m) acquisition of a privately owned biotechnology company that makes cancer drugs.

The UK's second-biggest drugs group is buying KuDOS Pharmaceuticals to try to regain its dominance in cancer medicine. It has traditionally been a strong source of cancer drugs but last year had a setback when its new lung cancer pill Iressa failed to boost survival in a key study.

AstraZeneca has spent up to $1.55bn this month on filling in gaps in its pipeline. On Thursday it spent up to $1bn on a new pill that could cut the risk of heart attacks and strokes in people with clogged arteries.

David Brennan, who takes over as chief executive on 1 January, has said he will pour money into acquiring new products and companies to help rebuild the pipeline after several disappointing drug failures since 2003.

Analysts at Goldman Sachs told investors yesterday: "We expect to see further in-licensing announcements in the coming six to nine months which, while none may separately be significant enough to move the needle, may help to build a credible pipeline story."

News of yesterday's deal boosted shares in AstraZeneca by 17p to 2795p.

KuDOS, which employs about 75 staff at two sites in Britain, was founded by a Cambridge University professor, Stephen Jackson, to concentrate on developing cancer treatments based on the inhibition of DNA repair. It was owned by a clutch of investment funds including BankInvest Biomedical Venture, Johnson & Johnson Development Corporation, Life Science Partners, 3i Group Plc and SV Life Sciences.

KuDOS has one compound in initial Phase I clinical development known as KU 59436, which could help fight breast and ovarian cancer, plus several other pre-clinical compounds and programmes.

AstraZeneca said it believed KU 59436 could be developed in combination with a diagnostic test to assess which patients were likely to benefit from the drug. The cash acquisition, paid from the company's $4.4bn money pile, is expected to close early next year.

A number of recent disappointments with drugs, including its cholesterol pill Crestor and its experimental blood thinner Exanta, have prompted some speculation that AstraZeneca might be a takeover target for GlaxoSmithKline. But the company's recent hunt for acquisitions suggests it is determined to try to close the gap with its bigger rival.