Biotech Values

[10nisman]

NVS - Strikes again... I wonder if biotech is undervalued when a 109% premium is offered?

UPDATE 2-Novartis buys "superbug" firm NeuTec for $569 mln
Wed Jun 7, 2006 2:00am ET

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060607:MTFH04410_2....

By Thomas Atkins and Ben Hirschler

ZURICH/LONDON, June 7 (Reuters) - Novartis AG (NOVN.VX: Quote, Profile, Research) boosted its infectious diseases portfolio on Wednesday by agreeing to buy British "superbug" specialist NeuTec Pharma Plc (NTP.L: Quote, Profile, Research) for $569 million.

Novartis said it was offering 10.50 pounds per NeuTec share and sought to acquire a 100 percent of the company, valuing the business at 305 million pounds.

The NeuTec board of directors has already recommended the takeover and shareholders with 39 percent in the firm support the deal, Novartis added.

"We believe this is a good and full offer after having completed due diligence," said Novartis spokesman John Gilardi.

NeuTec shares surged more than 80 percent on Tuesday after the company said it was in takeover discussions and a person familiar with the situation told Reuters that the approach had come from a large pharmaceutical company.

The Novartis offer represents a premium of 109 percent to the share price before Tuesday's news.

NeuTec specialises in developing medicines against hard-to-treat hospital-acquired infections, or "superbugs".

It is a relative rarity among biotechnology companies in having a number of late-stage experimental drugs that have not yet been partnered with a large drugmaker.

The bid is part of a two-year-old drive by Novartis to strengthen its portfolio of treatments for infectious diseases, focusing on hepatitis and life-threatening infections.

NeuTec's most advanced product, Mycograb, is currently awaiting European approval for the treatment of invasive candidiasis -- a life-threatening form of thrush. It is also investigating using the medicine as a breast cancer treatment.

A second medicine, Aurograb, is in final Phase III tests for treating methicillin-resistant staphylococcus aureus (MRSA).

On Tuesday, Novartis unveiled a separate, $507 million deal to boost its antiviral-drug pipeline by buying rights to the hepatitis C drug Albuferon from U.S. biotech company Human Genome Sciences (HGSI.O: Quote, Profile, Research).

The deals -- which follow one in March worth $525 million with U.S. biotech company Idenix Pharmaceuticals for another experimental hepatitis C treatment -- underscore Novartis's reputation as an aggressive acquirer of medicines developed by other companies.

Major drugmakers are increasingly turning to licensed products to fill out their in-house portfolios. Albuferon is a long-acting form of interferon alpha created by HGS.