Superbug biotech NeuTec gets takeover approach

Shares in NeuTec soared yesterday after the British biotech received a takeover approach from a major pharmaceutical company keen to snap up its novel anti-infection treatments. The stock closed up 422.25p at 925p, giving the company a market value of £267m.

Unusually for a biotech group, NeuTec has several promising products in late stages of clinical development but has not partnered up with a large drug maker. It is awaiting European approval for its lead product, Mycograb, for the treatment of invasive candidiasis, a life-threatening form of thrush. The drug is also being tested on breast cancer and meningitis patients.

NeuTec's other main product, Aurograb, is in final Phase III trials as a treatment for MRSA, the hospital superbug.

Analysts said major drug makers such as Eli Lilly, Merck, AstraZeneca and Bristol-Myers Squibb could be interested in acquiring NeuTec's portfolio to boost their drug pipelines.

Brett Pollard, at Numis Securities, said NeuTec had the kind of assets that pharma companies have been keen to acquire lately. AstraZeneca recently took over Cambridge Antibody Technology, and Pfizer snapped up Vicuron last year. Those deals fetched hefty premiums of 67 per cent and 84 per cent respectively, which would equate to a price of between 838p and 924p for NeuTec.

The company's two founders, Professor James Burnie and Professor Ruth Matthews, each hold a 3.5 per cent stake in the business. That means they could pocket up to £9.2m each if the deal goes through. Running the company on a shoestring, they have spent only £25m since setting it up at the University of Manchester in 1997.

Mycograb is an antibody drug which acts against the fungus that causes thrush and could also slow the growth of tumours. But NeuTec's drugs do not actively kill infectious agents and need to be given in combination with other medicines that do.

Pharma companies are particularly keen to expand in medicines made from antibodies, the body's natural immune defences, which have fewer side-effects than chemical compounds. The market for antibody-based drugs is forecast to more than double by 2010 from $14bn last year.