Roche makes hostile bid for Ventana Medical

Roche Holding AG unveiled an unsolicited tender offer of about $3 billion, or $75 a share, for Ventana Medical Systems Inc., in a move aimed at broadening the Swiss health-care company's diagnostic portfolio.

Roche said it has made "multiple efforts to engage in meaningful discussions with Ventana's chairman and board concerning a negotiated transaction," but that because the Tucson, Ariz., company has declined to talk about a transaction, Roche has decided to commence a tender offer.

Ventana representatives couldn't be reached for comment.

The per-share price of $75 is a 45% premium to Ventana's close of $51.74 in 4 p.m. trading yesterday on the Nasdaq Stock Market. In after-hours trading last night, the shares soared nearly 53% to $78.98.

Ventana's clinical systems are used to analyze human tissue to assist in the diagnosis and treatment of cancer and infectious diseases. The company reported first-quarter earnings of $18 million on sales of $64.4 million. Ventana forecast full-year sales ranging from $285 million to $289 million.

Roche Chief Executive Franz Humer said tissue-based diagnostics "is a technology where Roche has so far not been represented." An acquisition of Ventana would add a "very important" technology to Roche's diagnostic business, he said.

P&G announced closing of Clairol operations in Connecticut

P&G will close former Clairol headquarters and flagship manufacturing plant in Stamford, Connecticut

The administrative jobs will be transferred to Woodland Hills, Calif., and to Cincinnati. Many will probably go to existing beauty-care facilities in Blue Ash, downtown or be consolidated into other roles.

Diabetes drug key in purchase of Cambridge-based pharma company.

Biotech company Amgen said Wednesday that it plans to acquire diabetes-drug developer Alantos Pharmaceuticals for $300 million.

Thousand Oaks, California-based Amgen, announced the acquisition plans as part of a weeklong shopping spree, which also included Monday’s purchase of Ilypsa, a privately-held company developing a drug for chronic kidney disease, for $420 million.

Alantos Pharmaceuticals, based in Cambridge, Massachusetts, is a private company developing drugs for the treatment of diabetes and inflammatory diseases. Alantos’s lead drug candidate is in clinical development for the treatment of type II diabetes.

Type II diabetes occurs when the body does not produce enough insulin to control blood sugar levels. The drugs developed by Alantos work by making it easier for the body to lower these levels.

Following the completion of the transaction, Alantos will become a wholly-owned subsidiary of Amgen.

“We are happy to have reached and agreement with Amgen that will build on the important research and development accomplished to date,” Alantos’s CEO Keith E. Dionne said in a statement.

Shares of Amgen were down 32 cents, or less than 1 percent, at $57.29 at market close Wednesday.

Private-equity firms not making splash in biotech

Amgen to pay $420 million for Ilypsa

Amgen Inc. late Monday said it has agreed to buy privately held Ilypsa Inc., whose experimental drug treatments focus on kidney disease, for $420 million in cash.

Santa Clara, Calif.-based Ilypsa doesn't have any drugs on the market. Its lead candidate, ILY101, is indicated for the treatment of abnormally high levels of phosphate in the blood of chronic kidney disease patients on hemodialysis. ILY101 is not absorbed by the body, which "has the potential to allow for substantially lower daily doses and improved patient acceptance and tolerability in comparison to other products in this class of drugs," according to a company statement.

The boards of both Amgen and Ilypsa have signed off the deal, as have Ilypsa's shareholders. It's expected to close in the third quarter.

The purchase comes in the wake of safety concerns over two of Amgen's anti-anemia drugs, which combined accounted for almost half of its revenue 2006.

The drugs, Aranesp and Epogen, work by stimulating the production of red blood cells in the body. Numerous studies have recently raised safety concerns about the entire class of so-called erythropoiesis-stimulating agents, however. An advisory committee to the Food and Drug Administration recently issued strong additional recommendations for use of the drugs in the cancer setting; another FDA panel plans to meet this fall to consider their use by kidney patients.

Kellogg names P&G executive to board

Cereal maker Kellogg Co. on Thursday named Procter & Gamble Co. executive Robert A. Steele to its board, effective July 1.

Steele is vice chairman, global health and well-being at Procter & Gamble. He has been at the consumer product company for more than 30 years.

The divestures form part of a strategic initiative, outlined in October 2005, to achieve GBP250 million in disposals.

SABMiller shows interest in acquiring Coors

SABMiller PLC, owner of US number two brewer Miller Brewing, has given a clear signal it could be interested in a tie-up with US rival Coors Brewing.

Norman Adami, president of SABMiller's Americas division, told an investor presentation this morning that the group sees synergies in a potential tie-up with Coors, which merged with Canada's Molson to become Molson Coors in early 2005.

Adami said SABMiller would do 'everything reasonable' to improve its position in the US, including potential acquisitions, but declined to comment on the likelihood of a deal for Coors.

'Should they make themselves available ... clearly we would look at everything out there,' he said.

He added: 'Coors is a great company with a great portfolio and a great management team.'

Miller Brewing, which has struggled recently in the US in the face of rising input costs and downward pricing pressure, has around 18 pct of the US beer market, while Coors has some 12 pct. Any deal would still leave the group some way behind rival Anheuser-Busch however, which controls just over 50 pct of the market.

SABMiller has outlined plans to turn around the division's performance after it recorded a 17 pct decline in full-year EBITDA to 375 mln usd earlier this month.

Adami said the group is confident it can achieve low-single to mid-single digit growth for flagship Miller Lite as it looks to 'stoke' the brand and play up its low-carb credentials.

Miller president and CEO Tom Long added he expects the cost pressures to ease in the current year, after the group revealed a 100 mln usd disadvantage on Aluminium purchases compared with its rivals in full year 2007.

'We believe we are in a much better position to manage the cost structure this year than last year,' he said.

Long also indicated Miller's Project Unicorn cost saving plan, which focuses on manufacturing, asset care initiatives, procurement and freight, will deliver 120 mln usd in savings in full-years 2008-10.

Big Pharma blurring the lines with Big Biotech

Novartis, Abbott, Wyeth, Bristol hedging their bets with biotech drugs; less vulnerability to generics.

Big Pharma is starting to look more like Big Biotech.

The word "biotech" makes most people think of industry leaders Amgen and Genentech. But now large pharmaceutical companies are aggressively branching into biotech. Some drugmakers -- like Novartis and Wyeth -- have diversified so much that they've effectively become pharma-biotech hybrids.

"Big Pharma is moving towards biotech, so it will be interesting to see five or 10 years from now what the biotech landscape looks like," said Robert Hazlett, analyst for BMO Capital Markets. "It may be much more populated by Big Pharma than everyone gives them credit for."

Biotech drugs, which are made out of living cell cultures, instead of the simple molecules used to create traditional pharmaceuticals, are an attractive investment for Big Pharma for two reasons: the industry is fast-growing, and generic competitors can't touch it.

The biotech industry is expanding much more rapidly than pharma. U.S. biotech sales grew 20 percent to $40.3 billion in 2006, while pharma sales grew 8 percent to $275 billion, according to IMS Health. Big Pharma wants a piece of the action that offers the most growth, and that's biotech.

Biotech drugs are also appealing because they're not vulnerable to patent expirations and generic competition, which are the chief concerns of the pharma industry. Big Pharma lost $14 billion worth of annual drug sales to patent expirations in 2006 and is expected to lose another $12 billion in 2007, according to IMS Health. But biotechs don't have this problem. They don't have to compete with "biogenerics" because the Food and Drug Administration hasn't created a system for regulating them, which is a requirement for drug companies to get their products onto the market.

In order to churn out new biotech drugs, pharma companies have been hard at work breaking ground on new factories.In April, Abbott opened a $450 million, 330,000 square foot biotech plant in Puerto Rico. Bristol-Myers Squibb is building a $750 million biotech plant in Devens, Massachusetts. Wyeth's Grange Castle, a 90-acre biotech facility in Ireland that cost $2.4 billion to build, is said to be the biggest biotech plant in the world, rivaling facilities built by industry leaders Amgen and Genentech.

Other pharma outfits are already riding the biotech boom. Abbott built its new plant to make the blockbuster biotech drug Humira, a treatment for rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis and Crohn's disease that contributes heavily to company sales. Humira accounted for $2 billion of Abbott's 2006 sales of $22.5 billion. The company forecasts the product to reach $2.7 billion in 2007.

Abbott, which also has a biotech facility in Worcester Mass., said the Puerto Rican plant is for the production of "future biologics," suggesting that Humira is just the beginning.

"This is a very high profile area for the company, but Abbott is by no means thought of as being in the biotech bucket," said Phillip Nalbone, analyst for RBC Capital Markets. "[But] certainly the effort to establish a bigger, more efficient manufacturing facility would signal that this is a bigger area for development."

The pharmaceutical company Eli Lilly & Co. also relies heavily on biotech drug sales, which contributed nearly $4 billion, or about 25 percent, of total sales in 2006. And in recent years, the drug giants Merck and Pfizer have bought up smaller biotechs to bolster their pipelines.

The bulk of Big Pharma's sales have traditionally come from name-brand drugs that are protected by patents, but only until the patents expire. After that, generic drugmakers can produce low-cost versions of the drug, which will cause sales to decline by up to 80 percent.

But Big Pharma knows that biotech drugs are safe from generic competition, at least until the FDA creates the bureaucratic foundation for a biogenerics industry.

"(Biotechs) clearly offer better patent protection," said Jon LeCroy, analyst for Natexis Bleichroeder. "Instead of having a drug on the market for 10 years, you have a drug that's on the market - right now - forever."

"The profit life cycle of biologics is much longer than it is with small molecules because there's no clear path for biogenerics," said Barbara Ryan, analyst for Deutsche Bank North America.

The FDA is still in the early stages of creating a regulatory pathway for generic biotech drugs, so it will be years before biogenerics pose any real threat to biotechs. But even when a biogeneric industry does take hold in the U.S., the complicated manufacturing process of creating these "biosimilars" might keep most players out of the game.

Article By Aaron Smith, CNNMoney.com staff writer