AstraZeneca to pay $15.2B to acquire MedImmune

After a series of setbacks in developing new products, AstraZeneca P.L.C. said today it will pay $15.2 billion in cash to buy a Maryland biotechnology company, MedImmune Inc., in order to gain biotechnology medicines and enter the vaccines business.

Britain's second-largest drugmaker with a U.S. headquarters and about 4,500 employees near Wilmington will pay $58 a share for MedImmune, which is a 21 percent premium to the Gaithersburg, Md.'s company's closing price Friday of $48.01.

The deal will increase AstraZeneca's proportion of biologics drugs, derived from organisms, from 7 percent to 27 percent, add 45 products in development, and give AstraZeneca the influenza vaccine FluMist and the children's respiratory treatment Synagis.

MedImmune put itself up for sale April 12 under pressure from shareholders, including billionaire Carl Icahn, unhappy with the stock performance.

Shares have soared since April 11, the day before the sale announcement, and were up 18 percent at $56.68 in afternoon trading on the Nasdaq. AstraZeneca is paying a 53.3 percent premium to MedImmune's closing price of $37.84 on April 11 before it put itself up for sale.

AstraZeneca shares were down 5.4 percent to $55.84 on the New York Stock Exchange this afternoon on investor concern the drug maker may have paid too much.

AstraZeneca's chief executive officer, David Brennan, said the acquisition "adds an exciting existing pipeline, including two late-stage products, great expertise in biologic drug development and state of the art manufacturing facilities."

In the Philadelphia area, MedImmune has vaccine manufacturing and more than 100 employees at facilities at 3001 Red Lion Road, Northeast Philadelphia, and 3600 Marshall Lane, Bensalem, where the nasal spray FluMist vaccine is filled, stored and shipped.

Brennan said AstraZeneca has a "strong desire to retain" MedImmune employees "and maintain culture, with emphasis on retaining key talent and critical skills."

MedImmune spokeswoman Jamie Lacey said "the intent is for MedImmune to be the biologics center for AstraZeneca. And at this point it is business as usual."

MedImmune's two late-stage products are a next generation follow-on to Synagis, used to prevent respiratory syncytial virus, or RSV, in babies. The second is a refrigerated formulation of MedImmune's FluMist flu vaccine which is expected to be launched in the upcoming 2007-2008 winter flu season.

MedImmune will add about $1.2 billion in annual sales.

The deal, expected to close in June, will save AstraZeneca about $500 million a year from the combination of its businesses with MedImmune by 2009. GlaxoSmithKline, Merck and Wyeth had also been mentioned as potential bidders for MedImmune.

AstraZeneca said it will combine MedImmune with another recent acquisition, Cambridge Antibody Technology, to create a fully integrated biologics and vaccine business.

AstraZeneca has been struggling to replenish its research pipeline after halting work on several products in the last year.

The company, which also reported first-quarter earnings today, said it was terminating a licensing agreement with AtheroGenics Inc. at a cost of $83 million for a heart drug that did not meet goals in late-stage Phase 3 trials.

AstraZeneca halted work last year on the blood thinner Exanta, the diabetes drug Galida, and on an experimental compound for strokes. The drug maker's top products include the ulcer treatment Nexium, schizophrenia drug Seroquel, and cholesterol medicine Crestor.

On Feb. 1, AstraZeneca said it would cut about 3,000 jobs, or about 4.6 percent of its workforce, in the next three years to reduce expenses due to generic competition for its heart drug Toprol XL.

Separately, AstraZeneca said today first-quarter profit rose 10 percent to $1.56 billion, with revenue up 13 percent to $6.97 billion. The company said it still plans to buy back $4 billion shares in 2007.