NEW YORK, Jan 17 - Cambridge Antibody Technology on Thursday said it intends to acquire Canada's Drug Royalty Corp. for C$126 million, or roughly $78 million, worth of CAT stock.
The UK-based biotech company said it decided to snag Drug Royalty Corp. in order to help bolster its own therapeutic antibody portfolio it's building through collaborations with pharma and other biotech firms.
Drug Royalty Corp. fits that scheme: it has a library of "royalty and royalty-related interests in marketed pharmaceutical products that generate strong cash flow," according to CAT, which explained that it would use this revenue stream to help fund its own antibody pipeline.
CAT, which has developed technologies to use human monoclonal antibodies for drug discovery and drug development, is currently running clinical trials for six of its therapeutic antibodies.
According to CAT, the offer values Drug Royalty Corp. at C$3.00 per share (they closed at C$2.78 on Wednesday). The British biotech firm also said that Drug Royalty Corp.'s assets primarily comprise an international portfolio of royalty interests in a variety of high-profile drugs.
CAT stressed in the statement that it would not keep Drug Royalty Corp.'s management but would use its cash flow "to advance the clinical development of [our] growing pipeline of new antibody drugs."
Drug Royalty Corp. earned C$9.1 million on revenues of C$21.1 million in the seven months ended August 2001. The company had net assets of C$83 million on Nov. 30.
Drug Royalty Corp.'s shareholders can receive shares of CAT listed on the London Stock Exchange or CAT American depository shares listed on the Nasdaq.
Shares in Melbourn, UK-based CAT closed at 1,700 pence on Wednesday, giving the business a valuation of £602 million.
CAT has steadily been arming itself with tools and technology that it says will help it fulfill its antibody product goals. Last month, the company licensed access to Incyte Genomics' LifeSeq Gold database and obtained options for the rights to develop products based on those data.
Specifically, CAT will use those data as well as cDNA clones provided by Incyte to develop antibody therapeutic products. CAT also has the right to gain the exclusive licenses from Incyte to develop treatments aimed at protein targets found in Incyte's database.
"CAT has already demonstrated the power of combining antibody phage display and genomics-based target discovery, and this agreement adds a significant new source of genomics-derived targets to fuel CAT's drug development pipeline," David Chiswell, CEO of CAT, said in a statement on Dec. 19.