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Apr 23, 2007

AstraZeneca to Fork Over $15.6B for MedImmune

  • AstraZeneca plans to buy MedImmune for approximately $15.6 billion. This transaction will mark the company’s entrance into the vaccine arena.

    The bid follows MedImmune’s announcement on April 12 that it was seeking potential buyers. Since then, its value rose approximately 27% to close trading on Friday, April 20, at $48.01. AstraZeneca’s all-cash proposal of $58 per MedImmune share represents an 18% premium on this closing price.

    The offer comes not even three months after AstraZeneca reported the acquisition of Arrow Therapeutics for $150 million to enhance its anti-infective portfolio. The company reiterates that its previously announced $4-billion share buyback program for 2007 is unchanged. AstraZeneca, however, lost over 4% of its value today.

    “This acquisition represents a transformational step to deliver our biologics strategy sooner than anticipated,” comments David Brennan, CEO of AstraZeneca. “It creates a leading fully integrated biologics and vaccines business with critical mass and enhances AstraZeneca’s R&D science base through which we will deliver a stronger product pipeline. MedImmune adds an exciting existing pipeline, including two late-stage products, great expertise in biologic drug development, and state-of-the-art manufacturing facilities.”

    Through this transaction, MedImmune will combine with AstraZeneca’s wholly owned subsidiary Cambridge Antibody Technology (CAT). MedImmune’s marketed products include Synagis for the prevention of serious lower respiratory tract disease caused by respiratory syncytial virus, Ethyol to combat cancer treatment-related side effects, and FluMist, the first nasal flu vaccine.

    The takeover will also increase the proportion of biologics in AstraZeneca’s pipeline from 7% to 27% and more than trebles the total number of projects in development from 45 to 163. Most significantly, the company gains two Phase III candidates. These include the follow-on to Synagis, Numax, and refrigerated formulation FluMist with an anticipated U.S. launch for the 2007–2008 influenza season.

    Additionally, the acquisition secures AstraZeneca’s production requirements for the long-term. MedImmune reportedly has leading cell-line productivity levels. It also plans to have a 30,000-L capacity for protein engineering and biologics manufacturing by 2010. AstraZeneca reports that through further modest investment, capacity could be increased to over 60,000 L. Leveraging this advantage, the company says it can avoid the need for major near-term green-field manufacturing investment to support its biologics strategy.

    AstraZeneca expects the deal to close in June 2007. It reports that the addition of Synagis and FluMist will add $1.2 billion in sales. The company forecasts consensus sales growth for this portfolio to be 12% CAGR to 2010. Other assets include a royalty stream on the sales of the HPV vaccines with estimated consensus peak sales of $5.5 billion, potential milestones and royalties on MedImmune’s other licensed products, and $1.5 billion cash, including $89.4 million relating to MedImmune ventures investments at book value. The company predicts that the acquisition will enhance cash earnings in 2009.



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