AstraZeneca pays high price to fill drugs chest with £700m CAT deal

AstraZeneca paid a hefty premium to take over Britain's biggest biotechnology firm, Cambridge Antibody Technology, in a £702m deal yesterday, in the latest attempt to fill its threadbare drugs pipeline.

CAT's chief executive, Peter Chambre, who is leaving, is in line for a windfall of up to £2.2m from his 29,100 shares and share options in various incentive schemes.

Shares in AstraZeneca, Europe's biggest drug maker, closed down 7p at 2,850p yesterday amid investor concerns about the cost, which was £100m higher than expected.

The Anglo-Swedish company already owns 19.2 per cent of CAT under a £75m research alliance signed in 2004 and will splash out £567m for the rest of the company after agreeing to pay 1,320p a share in cash. The price represents a 67 per cent premium to CAT's closing price on Friday. The loss-making biotech firm is a world leader in developing drugs from antibodies, the body's natural immune defences. The deal gives AstraZeneca a drug in Phase II clinical trials and another in Phase I.

AstraZeneca wants to make CAT its centre for developing biological drugs to treat cancer, nervous diseases and asthma, and will make unspecified payments to retain the company's 300 scientists in Cambridge. The market for antibody-based drugs is forecast to more than double by 2010 from $14bn (£7.5bn) in 2005.

John Patterson, AstraZeneca's executive director of development, said: "Up to one in four of our later-stage molecules by 2010 will be from a biologicals background, whereas previously we've had little or no capability."

Unlike some of its rivals, AstraZeneca has been slow in investing in biological medicines, a fast-growing market.

David Brennan, AstraZeneca's chief executive, reiterated his priority to replenish the pipeline of new medicines, and said the company would continue to look for acquisitions. That signals a determination to remain independent despite persistent speculation that it is a takeover target.

The group has spent £1.5bn, including the CAT deal, in the past six months buying in new drugs. But some critics say the deals are expensive and risky.

CAT joins other large British biotechs in selling up: Celltech was snapped up by Belgium's UCB two years ago while in 2002 Powderject sold out to Chiron, now part of the Swiss group Novartis.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine