Genentech strikes $919M deal to buy Tanox

Welcome Genentech to the 2006 biotech buyout spree. The biogiant has agreed to pay $919 million to acquire Tanox--the first acquisition in its 30-year history. Genentech's primary aim was improving its returns on Xolair, a monoclonal antibody for allergic asthma that was developed by Genentech, Novartis and Tanox. Xolair earned $107 million in the U.S. in the third quarter. Tanox sparred with Genentech in an attempt to develop a similar therapy on its own, though it later agreed to shutter the program in exchange for $6.6 million. Genentech also obtains Tanox's pipeline, which includes an AIDS drug that prevents HIV from infecting the host. Shares of Novartis sank after the announcement as Genentech stands to gain Novartis' share of the Xolair profits.

Genentech is paying $20 a share for a stock that closed yesterday at $13.64. Analysts hailed the deal as new evidence for the hot buyout market for biotech companies. There have been seven buyout deals in the past two months, and investors are predicting that the hunger for acquisitions during a time of intense competition for promising therapies is far from sated.

- check out Genentech's press release on the deal
- here's an article on the acquisition from The Los Angeles Times
- see the The Wall Street Journal report (sub. req.)

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