Buzz: Why is Roche considering a big buyout of Alexion?

Shares of the rare disease drug specialist Alexion ($ALXN) spiked 18% this afternoon after Bloomberg reported that Roche ($RHHBY) has been putting out feelers to raise cash for a big buyout. The spike put Alexion's market cap at $23 billion, up $3 billion, making this potentially the biggest proposed deal of the year, dwarfing Amgen's ($AMGN) $10 billion play for Onyx ($ONXX).

Rumors of a possible Alexion bid have circulated for years, especially after the successful launch of Soliris, the world's highest priced therapeutic. Just weeks ago Alexion won breakthrough drug status for its late-stage program for asfotase alfa, an enzyme replacement therapy for extremely rare cases of a metabolic disease known as hypophosphatasia. The fast-growing biotech recently hired AstraZeneca's ($AZN) former R&D chief, Martin Mackay, to take charge of the pipeline. And it broke ground on a $140 million corporate HQ last month.

Bloomberg takes the long-running rumors of a buyout a step forward, reporting that its sources say that Roche has been in contact with Alexion off and on for months and recently has been casting around for the cash that it would take to pull off an acquisition of this size.

Roche declined to comment on the report, saying it stays away from market rumors. And the no-comment just threw added gas on the market fire.

If the story pans out, it would reflect Big Pharma's growing appetite for rare disease drugs. But the notion of paying a significant premium for Alexion after its share price had swelled enormously makes any buyout extraordinarily expensive--increasing the chances that Roche may never take the next step and actually offer a bid. But it's always fun to speculate.

"Alexion's growth is certainly still above average even though it's starting to slow compared with levels it hit a few years ago," S&P's Steven Silver told Bloomberg ahead of the report. "There's no shortage of companies looking to take advantage of the attractive regulatory environment for rare diseases."

Roche has been a strong player among the Big Pharma companies, with its cancer drug group building on new approvals from Genentech. Four years ago Roche paid out $46 billion to acquire all of the shares it didn't already own, making that the Big Daddy of all biotech deals.

Roche spends around $8.5 billion a year on R&D, but its decision to close its campus in Nutley, NJ, caused that figure to jump to $10 billion last year. 

- here's the story from Bloomberg

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