CAT Merges for Money; Chooses Well-Dowered OGS
The merger of Cambridge Antibody Technology and Oxford GlycoSciences won't, in the short term, solve many of the problems that both share--namely, a lack of products, scant clinical development capabilities and a non-existent sales and marketing infrastructure. It does, however, create a financially stronger potential acquiror in a European biotech industry in need of consolidation.
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The fight between Abbott Laboratories and Cambridge Antibody Technology over two partly overlapping royalty-giveback clauses in their contract on Humira has implications far beyond the money--which itself is not inconsiderable. Abbott could theoretically save itself some $60 million in royalty fees, but it could also win itself a name for playing hardball with its partners, even in the event of a major drug development success.
Cambridge Antibody's royalty dispute with partner Abbott over potential blockbuster Humira sends a sobering message to biotechs: beware poorly-constructed royalty offset clauses. The argument won't help Abbott's partnering image, either.
OGS-once one of European biotech's leading players-recently sold to compatriot Celltech for less than cash value. The deal shows that in the current climate, even bidding wars don't always push up acquisition prices, and cash remains king.