AstraZeneca agrees to buy MedImmune

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

AstraZeneca - Britain's second-largest drugmaker, with 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., 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, who were unhappy with the stock's performance.

Shares have soared since April 11 and closed yesterday at $56.57, up 17.8 percent. 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 5.3 percent to $55.91 on investor concern the drugmaker may have paid too much.

AstraZeneca 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 Rd., 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." As of Dec. 31, MedImmune had 2,359 full-time employees.

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 2007-2008 winter flu season.

MedImmune will add about $1.2 billion in annual sales. AstraZeneca had sales of $26.5 billion in 2006.

The deal, expected to close in June, will save AstraZeneca about $500 million a year by 2009.

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

Merrill Lynch said in a note to clients that while "the deal offers some long-term strategic benefits" it does little to address the weakness in AstraZeneca's Phase 3 research pipeline and "exhausts the company's cash pile for share buybacks and product acquisitions." Buying MedImmune does not "significantly address" AstraZeneca's greatest need for late-stage products that the company's sales force could begin selling soon, the Wall Street firm said.

AstraZeneca has halted work on several products in the last year.

The company 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 ceased development of the blood thinner Exanta, the diabetes drug Galida, and an experimental compound for stroke. The drugmaker'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 yesterday that its first-quarter profit rose 10 percent to $1.56 billion, or $1.02 per share, with sales up 13 percent to $6.97 billion.